Rising sea freight rates expected to normalise by 1H 2022
The biggest challenge the global shipping and logistics sector faced during COVID-19 was the unprecedented spike in sea freight rates which reflected in the cost of imported goods,industry analysts said. Prices of essential and non-essential goods kept increasing drastically since the second half of 2020 and freight rates are now seen coming down, they said.
While the high rates’ trend seem to continue even in the beginning of 2022, freight rates are expected to return to a decent range by the end of the first half of 2022. In Colombo for exports, a 40 foot container which was around US$ 900 before the pandemic went up to $12,000 which has now come down to $9,000 a container, an analyst stated.
The Business Times spoke to a shipping and logistic professional and analyst, Nilud Fernando who attended the National Print Conference held at the Waters’ Edge Hotel in Colombo on Thursday. The printing industry is one that’s facing many challenges with prices of imported raw materials increasing overnight due to the five to six fold increase in freight rates.
Mr. Fernando said,“The post COVID-19 era in first half of 2020, we witnessed an unforeseen volatile situation in global shipping and logistics, especially with shortages of shipping containers and vessel space in this transportation mode where almost 90 per cent of global trade take place overseas.”
The hike in rates was exacerbated d by a vessel space scarcity and shipping container shortage. Shipping and logistics is a great link that integrates total supply chain and if one link is affected that can impact on the whole process and result in a backlog,” he added.
“As a result the industry saw a high spike in freight rates which is unprecedented and invited many global bodies to approach the industry leaders for solutions. We see this trend in rates still continuing but we expect the rates to come back to a decent range by the end of first half of 2022,” noted Mr. Fernando.
“There has been a significant spike in the freight rates which is not a manipulation, but it is where the global shipping lines leas to,” he stressed while adding that people turned towards air freight due to the surge in sea freight rates which in turn made airlines profitable.
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