How Currency Exchange Volatility is Impacting SME Freight Costs

How Currency Exchange Volatility is Impacting SME Freight Costs

Geopolitical tensions and trade policies are shaking up global shipping, but for SMEs reliant on international freight, currency exchange fluctuations add another layer of risk. With freight rates falling due to uncertainty, the weakening of certain currencies can either increase or decrease costs depending on exchange rates at the time of transactions.

Clarksons, a leading shipping broker, reported a 19% drop in share value, citing global conflicts and new tariffs. Sanctions on 1,300 ships and disruptions in the Red Sea are straining supply chains, causing unpredictable shipping costs. While the Panama Canal has stabilized, the Suez Canal remains volatile.

For SMEs, currency movements impact freight charges, as many shipping contracts are priced in USD. A weaker pound, for example, makes imports more expensive but benefits exporters. To mitigate risk, businesses should consider forward contracts or multi-currency accounts to lock in favorable rates and manage fluctuations effectively.

Want to see how FX rates affect your costs? Use our calculator to instantly identify the true cost of your FX transactions and make informed decisions for your business.