Economic factors often regulate logistics operations that can significantly affect global shipping processes. An embargo is one of the influential freight shipping factors you need to consider when organizing your supply chain.
What is an embargo?
An embargo is any event or government restriction that prevents commerce or exchange (import or export) of freight to another country or state. These prohibitions apply to various goods, including services, products, and currency.
Embargo in freight shipping can be imposed in any historical context, as it covers all aspects of economic activity and trade. Generally, restrictions do not apply to the exchange of all goods. A specific embargo usually applies to particular transport, items, and services. More commonly, restraints refer to military equipment and oil embargo. These trade sanctions can result from diplomatic, unfavorable political, economic, financial, technical, and scientific pressure in international relations and foreign policy.
What are the embargo types?
Governments can impose several types of embargoes on a country or state. These can be total or partial. Some frequently used embargo constraints are:
- Political embargo
- Embargo to ensure national security
- Trade embargoes or embargoes that are economical can stunt the economic growth
- Embargo to prevent and respond to disputes about territorial borders
- Embargo to protect the health of citizens
- Environmental embargo to express a country’s disagreement with another country’s environmental or animal welfare policy
Some trade embargoes will still allow the exchange of specific goods such as medicine or food to meet humanitarian needs. Most international sanctions have provisions to enable certain import and export services under restrictions.
Why are freight embargoes imposed?
Typically, foreign trade embargoes relate to a specific country or group of countries threatening international security. The imposed trade restrictions function as a basis for terminating or suspending all activities related to the obligations of particular governments, citizens, and organizations. An embargo can affect a country or state in political and economic aspects. Imposing a ban on a specific country means that they can no longer utilize their financial resources for trade to their general capacity. It has adverse effects on economic prosperity. Besides, freight embargoes can negatively impact the supply chain flow for smaller businesses whose production is subject to restrictions. It is essential to keep an eye on the changes in freight shipping limitations to avoid possible supply chain disruptions and financial losses.
Why do carriers implement LTL embargoes?
LTL embargoes are restrictions applied by carriers to reduce their transportation capacity for such reasons as peak shipping season, bad weather conditions, or limited access to some locations. Suppose the carrier cannot accommodate your freight volume or is unable to meet delivery deadlines. They may apply some limitations that won’t affect you as a supplier. Lifting the embargo is possible if the carrier obtains the required capacity and returns to competitive shipping.
Besides, freight carriers can implement economic sanctions related to specific geographic regions or products restricted from shipping by the US Department of the Treasury. This type of economic embargo cannot be ignored or avoided.
What are the effects of LTL reight embargoes?
When you are trying to meet a growing customers’ demand and deliver their orders with no disruptions, shipping embargoes can become a stumbling block. Consequently, restrictions implemented by freight carriers can lead to a harmful impact on the supply chain process.
When shipping from embargoed areas or during the busy season, you may struggle while looking for the carrier to deliver your items. Be prepared for the tight carrier capacity and try to schedule your shipments in advance if possible. The earlier you start lining out your transportation, the wider is the choice of carrier services.
Carriers who accept embargoed items will likely take on more freight than usual, causing inevitable shipping delays. In addition, if the speed of your supply chain has been affected by a range of external factors, it is better to let your customers know about the freight shipping regulations you face and notify them about a longer than usual waiting time.
Increased freight rates
When a carrier imposes an embargo on a location that you commonly import or export from, you may have to look for a more expensive carrier company to complete the delivery. Same way, if the carrier’s capacity is tight due to extremely high demand, the freight rates will increase. However, early planning can contribute to the final pricing of your shipment.
GoShip has a mission to make all freight shipping affordable, convenient, and possible under any circumstances. We cooperate with the leading freight carriers so that clients can easily find a compatible option through the self-service platform. GoShip services include:
- LTL Shipping
- FTL Shipping
- Large Item Shipping
- Small Business Shipping
- International Shipping
- Freight Insurance
This shipping market simplifies finding and booking freight carriers that will work with you. Find a compatible carrier, get instant online quotes, easy booking, and reliable support in the simplest and fastest way possible with GoShip.