8 reasons Sea and Air Freight Charges increase after Covid-19 Pandemic
As importers and exporters, you will be wondering the causes of increasing air and sea freight charges after the occurrence of COVID-19 Pandemic. As international freight forwarder, I was surprised too. It was not that I was not expecting increase in freight but it was over 500% against the predictions. This event of increase has caused a increase in market prices of both imported and locally made items and goods.
In this article, we will examine the causes of high rise in global freight charges. We will explain in details the effect of each factor on maritime and aviation industry.
The list of factors that causes high rise in cost of shipping after covid-19 pandemic:
- Lockdown restrictions at Ports
- Peak Shipping Season
- Demand for shipping Facility
- Climatic Change
- Foreign Exchange rates
- Cost of fuel
- Government Policy
- Products global supply Chain
Lockdown restrictions at Airports and seaports
During the Covid-19 pandemic, almost all the countries in the world put a hold on sea and airports activities to reduce the spread of the virus. This cause many key players in both maritime and aviation industries to suspend the flight and sailing schedules, this led to high costs in the security of their facilities and equipment. In fact, many freight forwarding companies that have compulsory supplies have to use chartered or private cargo flights that have special permission to make essential supplies. The cost of shipping is still high because many ports (airports and seaports) in some countries have not been opened. Any available sailing or flight schedule will be at a high cost because of the restrictions on some ports.
Peak Shipping Season
During peak season, carriers always put extra charges in order to secure terminal space for loading because of high demand of sailing and flight schedules from exporters and international buyers. Peak season mostly occurs between November and January of every year. Festivals and holidays around the world are the major reasons shipping cost is high during peak season.
Demand for shipping Facilities
After many countries experienced lockdown and governments lift restrictions, many manufacturers and importers have pending orders and increase demand for products. Many ports in the world experienced port congestions for loading and shipping purposes. The demand for the limited facilities made the operations and service providers in maritime and aviation increase the shipping fare and rates. The people that can afford it go for it to meet up with their delivery schedules.
Weather affects maritime and aviation operations. When the weather is not favourable, there may be transit delays, and reschedule in the long run have an effect on the charges for shipping. Snow and harmattan, haze and other climatic change may affect the transit and directly have an effect on the cost of shipping.
Foreign Exchange rates
As an importer in Nigeria, freight rate are paid in dollars, euro and Pounds to carriers. Increase in exchange rate after covid-19 pandemic has made the shipping to be on high side couple with the fact that the global freight rate has risen.
Cost of fuel
As a freight forwarder when I request freight from shipping companies and airlines, they always include fuel surcharges of which they don’t charge it separately before.
Government policies on the maritime and aviation sectors of the economy determine the cost of shipping from carriers. Policies on taxation, Port operations, terminal rent, and technical operations will sum up the charges that airlines and shipping lines will release as rates.
Products global supply Chain
There are some products whether essential, special, or sensitive attract special rates from the carriers.
In conclusion, as an international freight forwarding company, we understand the situation of the high cost of shipping, but we always look forward to getting the best rates for you as our clients. We always look for the best for our clients to have the competitive cost of shipping in order for them to have seamless shipping experiences. Why can you try us today and enjoy the best shipping experience with the mind of integrity and transparency?