Supply Chain Council of European Union | Scceu.org
Transportation

COVID and congestion hike freight rates

Recovery of exports during post COVID period from many export-oriented countries such China, India, Pakistan, Thailand, Vietnam, Lines rationalizing services and incurring heavy, unexpected operational costs during COVID and even now due to congestion have led to a sudden increase in freight rates.

Moreover , delays in ports especially in congested ports such as FXT, NYC, SLV, JEA, PSD, SIN, SYD, increase in airfreight costs due to limited and reduced flights, Lack of labour at ports or even transportation at destination, health and safety restrictions-working times, sudden spike in demand in The Europe and USA for stocking, medicine have also contributed to the sudden increase in freight rates, Shamal Perera, Director Operations -MSC Lanka told a webinar held under the theme ,’Minimizing Obstacles in Sea Cargo (import/export) during Covid.

The webinar was organized by Sri Lanka Export Development Board. Commenting on empty container shortages that the country is experiencing owing to COVID-19 pandemic, he said lack of imports to Sri Lanka has caused this shortage and overall, 18% market drop was witnessed. Due to post situation, October imports dropped, services omitted at Bandaranaike International Airport and empties were not discharged due to high move count. Perera further said that seaborne trade is about 90% of the total world’s trade, and about 3/4 of surface of earth is covered by water and there is long distance between countries with row materials and industrialized countries.

“The economies of scale has resulted in development of large ships for carrying cargo and other row materials so as to keep the transportation costs low,” Perera said.

Further, modern container ships carry large number of containers with finished goods to places where they are in demand, Perera noted.

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