Why is International Shipping So Expensive?

Shopping is always a great way to treat yourself and here at Global Shopaholics, we definitely recommend you doing so. However, it can easily get complicated if the products are being shipped to your doorstep. It is not necessarily a logistical hurdle as it is a financial one because international shipping can get very costly. There are many reasons as to why this is the case and they will be discussed below but for now let’s talk about why one would choose international shipping.

One of the most basic and obvious reasons is ordering from international websites who do not just charge for the product itself but also take some shipping charges to cover their own costs. It is important to realize that although these shipping charges may look like a lot to many, they are a great way to ensure that you get delivered with your chosen product and that too without much damage. It is usually the case that the higher the shipping charges, the more guarantee you have as a customer that your product will reach at your doorstep within promised time and would be delivered by the most secure way possible. There are obviously many channels through which your product goes through to reach you and that is how one can explain shipping in the simplest of ways. A series of different channels that enable and promise a safe and secure delivery of all your products just like you expected and were hoping for is exceptional.

Before diving deep into the Intricacies of international shipping and why it is just so expensive, it is of significance to understand that these charges vary from country to country because every shipping line have their own pricing and models which they pitch to businesses who then opt for the most budget friendly shipping line. One thing is for sure that if you are ordering from a website that is asking for shipping charges, it is better to see if they are not just as much in price as the product because it just becomes very off budget for most. To see which product is worth being shipped is also very important when shopping online. Look at your budget, the product you are ordering and its shipping expense and if they make perfect sense and fit along the lines of your budget, what better reason to then click ‘confirm order’.

1.      Fuel Prices

How your order gets delivered to your designated place plays a huge role in determining the shipping rates. If shipping is across the country, locally, one has the choice to choose from many shipping lines because generally, there are many companies who operate inter country. This is also more budget friendly because the customer has the choice to opt for a least expensive shipping line and compromise on the time taken for the product to be delivered. It is totally up to the customer though. However, this changes if a product ordered is being shipped from a different country altogether.

When a product is being shipped from an entirely different country, there are many ways a shipping line gets it delivered. There is the airplane, or the sea or a truck if there is a road connecting the two countries. All these modes of transportation require fuel and the most expensive one of them all is jet fuel. There is not much choice of choosing a shipping line or method when something needs to be delivered across countries which is why the customers then have to just accept the shipping charges as they are. Many online businesses, both small and large, get their inventory shipped from a different country as well so they tend to have huge costs to cover which is why when you place an order from an international website, the shipping price tends to be a lot higher. Fuel prices in general have increased over the years. All three modes of transportation mentioned above operate on this very fuel. It can indeed get costly and with every 1 percent increase in the fuel directly affect shipping prices as well. It is definitely one of the major factors in explaining such expensive international shipping rates.

2.      An increment in the Consumer Demand

Supply and demand are a huge determinant of rising international shipping costs. It is a very simple phenomenon. With the rise of E-commerce businesses and more and more people resorting to online shopping, the demand of shipping has only increased. There are a set number of containers which are shipped to various countries across the globe and every business has a shipping line which they are in collaboration with to ship their products in bulk to the country where the order has been placed from. It has been observed that this capacity to shipment containers and their rolling out has not increased much. At least not in an exponential way like the E-commerce industry. As this market for online shopping widened, so did the demand for shipment.

However, this is where the gap came in. although the demand increased, the shipment containers and their space did not. So, there were many businesses looking for international shipment but not many containers. This made the shipping costs to rise. It is a simple concept of the neoliberal economic system. More demand towards a concentrated type of service causes the prices to rise. Many shipping companies increased their prices because they observed how an increasing number of people needed their service. They bid the highest prices and continue to do so because according to the principle, there is a high demand so the supplier of the service has the autonomy to dictate a price. This increase in price then leads to a rise in shipping costs overall towards all customers. Moreover, there has not been much fluctuation in international shipping costs, however, to avoid any sort of misunderstanding and loss of profit, most businesses assert a specific shipping cost. This enables them to make sure that any decrease or increase in the shipping companies does not directly impact their profit margin. It can be said that due to the continuous increase consumer demand and a growth in the E-commerce market, there has been a very high rise in the international shipping costs deeming them expensive worldwide.

3.      COVID’19

One of the biggest health crises of the 21st century, COVID’19 Pandemic indeed had a huge part to play in the rising prices of international shipping. It not only effected the lower income economies but has a devastating impact of the developed ones as well which then has ripple effects across all industries, shipping being one of them. China and Europe being amongst the largest manufacturers of products, there are many shipping containers which land everyday on their ports and get ready to be shipped across the globe in different countries. This was a very common practice before COVID and there was a proper management system which checked and authorized these containers and their mode of transportation. Millions of worth of consumer products and goods were transported in and out of these large countries. However, things drastically took a decline when COVID hit. Due to the sensitive nature of the virus and its fast transmission rate, all the shipping processes stopped. Many shipping containers which were already in China and Europe were stuck there. Mostly in China, there were large numbers of containers and products which needed to be shipped but could not. There was a long pause in the process and delivery was delayed by several months.

The shipping management system was also on the verge of collapse because there was just so much uncertainty and safety regulations which needed to be considered before taking any decision. Any and all backlog as a result of COVID failed to reach in time and the new orders lined up for these shipping containers got delayed and postponed even further. This led to extensive amounts of shipping containers to be either stuck and not being able to move out or just caused delay for other shipping orders. There was clearly a lack of containers but the demand for products did not significantly decline. There was still a need to deliver on time and this caused the shipping companies to increase their prices. As explained above already, there was a huge demand and almost all of the businesses were looking for alternate containers to ship their products in. The ones which they did book, their prices were not low and hence, overall, the international shipping costs drastically increased. The pandemic was a great and potentially one of the biggest reasons why international shipping got so expensive for the customers who shopped online through an international website.

4.      Long Process, Many Steps

Shipping is definitely a lot of work. It is not just about the responsibility and trust the clients place on the shipping company but also about how there is an extensive process which needs to be implemented in order to deliver on the right day and right time without any repercussions. International shipping is expensive but it also starts to make sense why when the whole process from placing an order to delivering it is understood. For customers, it is very difficult to pay such large shipping costs but if you consider the contextual situations along with the global economic circumstances, it will start to come in place. International shipping has a lot of steps and with completion of each step, there is a cost involved.

For example, it needs to be picked up from the ground location by the shipping company and then it needs to be loaded in the appropriate mode of transportation. This can be either air, water or road as mentioned above. After that, it would land to the country where it needs to be delivered. This is not all. The product then keeps moving from one place to the other until it reaches the doors of its owner. It is a long and tedious process involving many entities that all charge a certain amount of money. From the employees to the vehicles to their management, everything requires money hence these shipping costs a culmination of all that in order to ensure that the process runs smoothly and there are no unnecessary problems along the way. 

Conclusion:

This blog is definitely a great way to inform yourselves of why exactly are you spending so much on the shipping costs. There are a multitude of reasons, however, the reasons mentioned above are amongst the most important ones because they completely define how the shipping system works and helps you better understand why it needs so much money to operate.

From COVID to consumer demand, everything is explored in this very blog so if you have any confusion and doubt towards a high spending on shipping, this will pretty much clear it up. Shipping companies faced tremendous problems during the Pandemic and to recover from the losses, all prices were increased. Shortage of shipping containers and more demand of products needed to be shipped literally shaped the landscape for a high price and since then, the prices have not gotten down.  E-commerce also has a role in getting the international shipping costs to where they are now but now we know. It is always better to understand why we are spending so much on something and this blog is a great overview and answer to that this question. It provides detailed information on the whole conundrum and ensures that you are aware of each and every detail regarding the expensive international shipping costs.