The rising cost of cargo transportation can only partially be explained by the attempt of market players to take revenge and compensate for losses of 2020. ABIPA analysts predict increases in the prices of air transport by the New Year due to objective reasons. It has to do with lack of flights and their high occupancy, as well as unstable situation in airports caused by regular flight cancellations and delays amidst pandemic.
Cause-and-effect Relationship
Due to a small number of flights to the US, the cost of chartering doubled as compared to the times before COVID-19. Tariffs will continue to escalate in this section and many others due to decreased cargo capacity on passenger airlines, sanitary conditions, “aseptic services”, etc.
ABIPA experts note that increase in prices is also expected for road transport by the New Year. Tariffs fluctuate due to constantly changing market conditions: waves of pandemic, government decrees on border entry restrictions, etc. Other factors of growing prices for road transport are rising costs of fuel and spare parts, smaller players exiting the market, and lack of drivers.
Rising tariffs for air and inland cargo transportation is directly connected with global container crisis. The shortage of empty reusable containers in the ports of Southern Asia resulted from its huge accumulation in the US and EU. The imbalance was caused by China rapidly terminating lockdown and returning to its pre-COVID-19 production capacities. Due to this, a severe shortage of empty containers was observed in the beginning of 2021 enhancing the development of railroad and air transportation globally.
Unstable sea transportation forces importers to look for new multimodal transport routes. Logistics companies shift to the demands of customers changing usual cargo routes. Establishing more stable delivery routes leads to increased price of services.
The growth of logistics costs by the New Year results from widespread digitalization and introduction of IT-technologies. Thus, implementation of Platon electronic system affected tariffs of Russian freight-forwarders with cars exceeding 12 tons in mass. Annual fee indexation is one of the factors of increased prices for road transport within the RF.
Digitalization and Increase in Logistics Costs by the New Year
Freight-forwarders introduce highly efficient intellectual technologies to reduce the cost of manual work and vehicle use. Robotic automation of operations makes them transparent for clients and the company itself. Installing telematic equipment allows to monitor the state vehicle and cargo en route, fuel consumption, etc.
According to analysts, this will lead to a 20% acceleration of processes in cargo transportation by 2025, cutting fuel and repair costs, etc. However, the introduction of advanced IT-technologies requires substantial spending from logistics companies at an early stage. That is why digitalization is at the moment another strong factor of growing prices for road cargo transportation.
To Sum up
The growth of prices for air transportation by the New Year, as well as increased tariffs for land transport results from a variety of reasons. However, in the future, with no new force-majeures at hand, the market situation will stabilize.
ABIPA specialists are recognized logistics experts. We always keep our finger on the pulse and monitor slightest changes in transport services market. We give high-precision forecasts of the situation and take measures in a timely manner. Our experience, resources, and capacities allow for fining the best possible solution for each client in any situation.
If your business is tied to transporting goods within Russia or abroad, do not hesitate to contact us: we will help you minimize transportation costs and push boundaries, at the same time.