What is the impact of freight availability on global trade?



Introduction

Freight availability is one of the most pressing issues in global trade right now.

Freight moves goods around the world, facilitating international trade and allowing for global economies to work together. The growing importance of freight has led to a need for more efficient ways of moving goods across borders, but there are huge shortages in the number of containers and trucks available, which leads to higher costs for businesses and reduced competition within the market. Higher prices will ultimately lead to higher prices on consumers because companies can charge what they want without fear of losing customers due to price competition. These problems will only get worse if something isn’t done soon!


 

1. The importance of freight availability for global trade

Freight plays a pivotal function in the global trading system by facilitating international trade and creating economies of scale. This lack of freight will likely lead to higher costs for businesses and reduced competition within the market, as well as higher prices for consumers.

The lack of freight has already led to higher costs for businesses and reduced competition within the market. For example, shipping containers are in short supply at major ports around the world, leading to lengthy queues that make it expensive for companies to get their goods shipped when they need them. This is because shipping companies are able to charge what they want without fear of losing customers due to price competition.


2. How the lack of available freight has resulted in higher costs and reduced competition

The lack of available freight has resulted in higher costs, reduced competition, and ultimately higher prices for the end consumers.

A shortage in the number of available containers and trucks has led to high costs for businesses. Reduced competition in the market will lead to inflated prices for consumers by creating a monopoly in the industry. In order to illustrate how the lack of freight availability has harmed businesses and consumers, we will look at a few different examples.

In this example from 2018, there were far less available trucks than their was demand for shipment because large corporations such as Amazon had bought up a huge amount of the available truck capacity in advance due to increased competition between delivery services. This left businesses which have use an independent carrier with no way to fulfill their orders. Due to the shortage in trucks, these companies were forced to pay higher prices for shipping their goods or wait longer for their deliveries. In addition, because they couldn't deliver shipments on time, they lost market share and risked losing customers all together if they have been unable to meet customer expectations.

In this example from 2017, there were shortages of containers available for transport on ships and trains in Europe. This led to companies needing to increase the cost of their goods because they had too much inventory.

As seen in these two examples, when there is a shortage in freight availability, businesses are forced to pay more for shipping or wait longer for deliveries; losing customers if they can't meet customer expectations such as when Amazon bought up such a huge amount of truck capacity at the beginning of 2018. In addition, when it comes to global trade, countries such as China and the United States who rely heavily on global trade for their economic growth lose out significantly when there is a lack of freight availability.

Now the COVID 2019 has increased this trend this is even worst.


3. Create a marketplace to solve the Issue

One way that freight availability could be improved would be to create a marketplace where shippers can connect with carriers in need of work in order to create more flexibility in the shipping industry. This would allow for companies in need for shipments to avoid paying higher prices or wasting too much time waiting for their deliveries. The marketplace would serve as an intermediary by making sure that there was enough demand for available capacity so that no one company is being overcharged. This solution would help to alleviate the problem by increasing competition within the market, which would drive prices down.

One of the most important factors in global trade is having enough freight available for companies looking to ship their goods anywhere around the world with minimal hassle and high efficiency.

When there is insufficient freight availability, it drives up costs for businesses and reduces competition within the market. Since this lack of supply has led to higher prices for consumers, we see that freight availability is key in allowing people all over the globe access to cheaper goods which is necessary if we want sustainable growth worldwide.


What steps would be necessary to develop such a marketplace

In order to develop a marketplace that would solve the issue of freight availability for global trade, we would need to find people with the ideas as well as those with the skills and knowledge to implement it. We would need to do extensive research into what types of users would be interested in such a marketplace as well as the costs and necessary legal actions. The next step would be to leverage social media networks, partnerships, and organizations in order to build a community around this idea. Finally, we would need to design the marketplace itself by examining current workflows and determining how they can be improved through technology or other solutions. When it comes down to it, this marketplace would increase competition within the market and drive prices down since carriers won't need to raise costs in order to remain afloat.

So the main challenge here is to convince the top 5 companies to be part of it. Quite a challenge.


 

Conclusion

Freight availability is something that companies around the world rely heavily on for global trade as well as those countries that are dependent on trade as a major part of their economies such as China and the United States.

While some may see this lack of freight as an issue only relevant to shipping companies themselves, we have seen how it has a great impact on everyone from businesses looking to ship goods to consumers who want access to cheaper goods.

In addition, creating a marketplace which connects carriers with shippers could be a solution for this problem although there are many things that would need to happen before it could become a reality. Not the only solution though.