The knock-on effect of the rising costs of fuel, employee and fuel shortages, port congestions and more that has been happening since COVID-19 was declared a pandemic. Rising freight rates can now be seen across all form of logistical transport, not just with ocean freight, but through air, rail and road transport too. The fact of the matter is that the rising freight rates are now impacting the rate of inflation which has caused major economic distress around the world.
In terms of manufacturing logistics, production and manufacturing companies have seen a spike in transportation/logistics freight rates spike by 18% compared to the year before, which factors the dock to doorstep inflation costs. These rising freight rates are causing a rise in consumer goods and rising costs for companies and households alike. All in all, the rising freight rates and the impact on the economy is disrupting the ratio of consumer’s income and expenditure as even essentials are now more expensive.
Constraints placed on logistics and supply chain has driven up freight rates to an unsustainable level that has greatly impacted economies. Further recent outbreaks have also caused lockdown in certain areas of the world, which has also caused unforeseen delays and issues.
The pandemic also saw a shift in consumer spending, from services to goods (especially those available on ecommerce sites), especially so during the first few lockdowns. However, since then, almost two years later, there is evidence of the same happening yet again.
Further congestions at major ports of the world, holiday inflation and export restrictions have the world in disbelief especially during the holiday season. Whilst some industries and countries are facing hardships, from food inflation, lack of automobile sales.
However, whilst freight rates are up, the logistics industry is gearing for the new year to deliver on supply-demand dynamics especially in terms of logistics provider stakeholders.
What are your thoughts on the current freight rates and inflation?