As COVID 19 has reared its head again, Shanghai and other Chinese ports have been put under pandemic-related restrictions. While the ports are open for business, the lack of manpower is leading to prolonged waiting periods for the vessels at these ports.
This backlog has led to a drop in the availability of transoceanic container vessels, leading to a surge in prices. Moreover, the dearth of trained labor in unloading containers has also led to increased loading and unloading costs. Some of the other reasons for high freight costs include:
Surging Fuel Prices
Shipping companies have been increasing their rates because they have to deal with the elevated operating costs due to higher fuel prices. The ongoing war between Ukraine and Russia has decreased fuel supplies all over the world. While many OPEC members have increased production, it still hasn’t been enough to offset demand.
Inflationary Trends
As global inflation levels increase, shipping companies have had to increase the wages of their crew members or risk strikes and the migration of skilled labor to other sectors. This has also resulted in increasing operating costs throughout the shipping industry.
Increasing Global Demand
This is one of the single most important factors responsible for the steep increase in shipping charges in the first half of 2022. The easing of lockdown-related restrictions has led to a massive increase in buying activities. This has put severe pressure on containers and ships alike. The sector has been rushing to cope with the demand but the lack of supply has led to delays, which in turn, have also led to rising shipping costs.
This holds particularly true for the tyre industry ata holistic level. The resumption of post-pandemic transportation all over the world has led to a massive demand for new tires. However, higher freight charges have led to increasing pressure on tire prices as well. This trend is set to continue in the near future.
