- A cargo traffic jam on the world’s roads, seas and air corridors could easily continue into next year.
- It will continue to increase shipping costs, according to the head of one of the biggest U.S. freight brokers.
- Annual contracts for long-haul trucking will probably rise in the low-double-digit percentages this year.
- It is driven by spot rates that have jumped 35% from a year ago, Biesterfeld said in an interview. Air-freight prices have almost doubled from a year ago.
A recent news article published in the Economic Times reveals that global cargo traffic jam would continue till 2022.
New contracts are negotiated
As a broker, contracting with carriers on behalf of shipping customers, C.H. Robinson can get squeezed when long-term contracts don’t keep pace with spot costs but adjust as new contracts are negotiated.
The Eden Prairie, Minnesota-based company projects an adjusted operating margin of 40% for its North America Surface Transportation unit this year, improved from about 33% last year.
Covid-19 pandemic
The crunch developed as people who were barred by the Covid-19 pandemic from going to movies, concerts and restaurants spent their money on flour and treadmills instead.
The effect was magnified in countries where citizens received government relief. Shortages of trucks and drivers.
In some cases because of enhanced unemployment benefits, contributed to supply-chain bottlenecks. So, too, has the reduction in airline flights, which typical carry some freight.
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Source: Economic Times
