Over the last few years, we’ve seen shipping and transportation costs rise significantly. And unfortunately, these costs are expected to continue to rise in the future. In fact, we expect to see transportation costs reach new levels in the next couple of years and remain above the pre-pandemic levels in the longer term. But why is this? Here are some of the reasons why international transport and logistics costs are on the rise:
1. The COVID-19 Pandemic
Australian based logistics provider – TMSOnline.com.au says that international freight and logistics prices have skyrocketed in recent times. There are many reasons for this. One of the main reasons for the sharp increase in transportation costs was the COVID-19 Pandemic that affected almost every country in the world.
The pandemic forced many importers to withhold their plans, which in turn caused a decline in orders from suppliers. This resulted in a decrease of between 5-15% in transhipments in 2020. However, at the start of 2021, importers started catching up. This meant that order volumes and transhipments increased considerably. The consequences of this are delivery delays, congestion, and an increase in transport and logistics costs.
2. Issues With Manpower
Another reason why transport and logistics costs have risen considerably over the last few years, and are likely to continue to rise in the future, is that the transport industry is seriously understaffed with drivers. The reason for this is simple – new opportunities are becoming available for people with this skill set. Not only are these new roles better paid, but they’re also more sociable hours too. This means that drivers are now much less likely to work for low wages and long hours. Thanks to this, transport companies have had to increase the wages of their employees in order to remain in business.
Over the next few years, we expect to see a congestion increase in ports and on the roads. Many countries plan on combating congestion through tolling and new pricing schemes. These schemes are mainly aimed at transportation companies. These new schemes aim to try and force transportation companies to use trains to transport their goods. This will help to reduce congestion, as there will be fewer transport companies using the roads.
While there are very few tolls and pricing schemes in place at present, when they are put in place in the future, we expect that they will have a huge impact on transportation costs.
The coronavirus pandemic has caused most industries around the world problems. And in that regard, it’s easy to see why logistics costs are on the rise. However, if we put logistics costs aside, the expenses in the transport sector have risen by considerable amounts in the last couple of years. There are several reasons for this. One of the main reasons is the lack of manpower in this sector, but this isn’t the only reason. As you can see from the examples above, there are also many other reasons why transport and logistics costs have risen over the last few years and why we expect them to reach new highs in the future.