Sea freight has become just as expensive, as logistics operators reduce their fleet size, notes Buchman. The higher costs reflect the reduction in demand for both imports and exports, particularly in industries providing non-essential services. This is because retailers do not want to incur expenses from storing unsold inventory in their factories, while logistics operators are reluctant to move goods due to the increased checks they have to undergo.
SINGAPORE (Apr 17): Global supply chains have been facing one disruption after another, starting with the trade war between the US and China in 2018 and 2019. Now, no thanks to the Covid-19 global pandemic, further changes are seen, as capacity has been cut and schedules upended. “Covid-19 has seen a blanket increase in freight prices,” says Eytan Buchman, chief marketing officer at global freight forwarding operator Freightos.
Now, just to be sure, supply chains of food clothing and basic supplies across borders remain “functional”, says Buchman. However, “the lockdowns have grounded airlines and reduced air freight. With air cargo accounting for nearly 60% of global supply movement, this has increased the cost of flying goods across borders”. Air freight costs have skyrocketed to an average of US$23-US$24 ($32-$34) per kg, from pre-pandemic rates of around US$4-US$5 per kg, he says.
