Supply Chain & Logistics update
Amsterdam, 16 May 2022 - The past few months, the impact of both the war in Ukraine and the effects of new COVID lockdowns in China have become more apparent. In this update we give you an insight into the current situation and its effects on the global freight market.
Similar to the last two years, freight rates remain unstable. Although ocean freight rates have shown a downward trend since the first quarter of this year, carriers continue to levy subcharges on some routes to prioritise cargo, and bunker surcharges* are increasingly being added to the total freight cost. With the fuel costs being on the rise, the total price to be paid for a container continues to increase. For air freight, average costs in April this year were roughly 25% higher than last year, while transported weight showed a 12% decline. Overall, global air freight rates are 170% higher than pre-COVID, with the current pressure on capacity and the rising fuel prices, air freight is not expected to show a decrease in costs anytime soon.
The war in Ukraine has a great impact on the air freight market, with a lower capacity due to the sanctioning of a number of Russian cargo airlines. Several airlines have also cut flights between Asia and Europe due to the necessity to fly longer routes, avoiding Russian airspace. The global ocean freight continues to be impacted by lockdowns in China, primarily in Shanghai. Capacity and equipment availability from many origins remain tight. Especially Bangladesh and Sri Lanka have severe container shortages. As Colombo (Sri Lanka) is an important transit hub for ocean freight in South Asia, local transport is hindered and port operations are affected.
We continue to work closely together with our freight forwarders to ensure shipments depart as planned, using several mitigating actions we have started during 2021.
* Additional surcharge levied on the ship operators to compensate for the fluctuations in fuel prices