The Corner

The Economy

Business Survey: High Freight Costs Raising Prices

Logistics company Freightos conducted a survey of over 300 importers who use its services. They sent the first survey in January, another in June, and the most recent one was from November. It’s not a scientific survey, so results can’t be generalized to the whole country. But it gives a useful perspective on how businesses are responding to supply-chain challenges.

Here are some of the results:

In January 77% of respondents answered that they’ve encountered supply chain challenges since the pandemic began and in June 79% answered the same. However, in our most recent survey, nearly all respondents (93%) reported experiencing supply chain difficulties.

In January and June, less than half of importers reported raising prices on their goods in response to higher freight costs, while in November 64% of importers increased prices.

In November’s survey, nearly a third of businesses who responded that they recently raised prices did so by more than 20%, compared to only a fifth of businesses who reported similar price increases in June.

We found that pre-pandemic, ocean shipping costs per unit for smaller items ranged from $0.30 to $0.40, or about half a percent of the sticker price.

But elevated freight rates have pushed costs to $4-5 per unit. Even with increased sticker prices, ocean shipping contributions have climbed to 5% of the current inflated price tags.

For bulkier items like large TVs, per-unit freight costs climbed from $3.66 to more than $48 and from 1.2% to more than 8% of the consumer price. This explains why more businesses are raising prices even higher than earlier in the year.

Compared to large businesses, small importers were twice as likely (36% vs. 17%) to have reduced their margins to accommodate rising costs. They were also less likely to have benefited from an increase in demand for their products (55% vs. 68%) and were twice as likely to be shipping less volume than before the pandemic (39% vs. 16%), mostly due to rising shipping costs (80%).

Check out the full write-up from here.


The Latest