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The Effects of Oil Price Drops on Importers, Exporters and Shippers

Posted on Wednesday, July 8th by Pallet2ship logo

The fact that price fluctuations have a major impact on industries, be it the shipping industry or any other industry for that matter, is unquestionable. However, a closer look at the particular ways in which these fluctuations impact these industries is bound to generate a great deal of questions. Let us take the example of the recent drops in oil prices and their repercussions within the shipping industry.

First and foremost, it should be noted that there is always an explanation lying behind any price fluctuation, this being in fact the first aspect to capture the attention of experts. Once it has been identified, all the attention is focused on the advantages and disadvantages, if any, of those particular price changes. For instance, drops in prices tend to create the impression that customers are left with more financial resources to invest in various goods or activities, thus being enabled to make an increased contribution to the economy. Last but not least, they stir speculations as to what happens to the money that is freed up thereby, whether it goes from the oil companies to the people or elsewhere.

As far as the recent drops in oil prices are concerned, it has been proved once again that the truth lies somewhere in the middle. The speculations on the causes of these drops have been many, yet experts have concluded that it is the damaged trading relationship between the United States of America and China that lies behind them. Prices circling around 4 USD per gallon are bound to prevent people from buying, travelling or doing pretty much anything involving the consumption of oil. At the other end, oil consumption by the Chinese has decreased visibly, this being a clear indicator of the slowdown of their economy according to experts in the field around the world. This slowdown also becomes clear upon a closer look at the production orders, some manufacturers being left with excess capacity.

In this context, any decision to source out of China should be well informed. Experts recommend that orders in the relevant sector be watched in advance for a maximum exploitation of the economic slowdown to be achieved. Thus, importers, exporters and shippers alike can benefit from lower prices in otherwise rigid business contexts. In this context, however, the conditions can change considerably within as little as twelve months.

Thereafter, it is the importer's, exporter's or shipper's responsibility to find the means to pass these discounts on to their customers in an attempt to gain their loyalty. It should be noted that this is probably one of the safest and easiest ways to keep customers close. In the end, what they invariably look for is a reliable business partner, one committed to both the business and the customer. Such offers do just that. They prove one's commitment to achieving customer satisfaction both in the short run and in the long run, so they are bound to be appreciated.

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