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Freight Market Update: June 21, 2021

June 22, 2021

A Sendy Freight Weekly Round-Up to keep you informed on all things freight and logistics in the region.

Freight Rates:

Looming inflation feared as shipping costs skyrocket

Consumers will be facing an inevitable price escalation across an array of commodities. There has been an increased demand in transportation, a shortage in containers, saturated ports and a shortage in dock workers all due to the existent pandemic.

All these factors have combined and squeezed the freight capacity on every route. Since more than 80 per cent of all goods traded are transported by sea, freight-cost surges threaten to spike prices of everything from raw materials, building materials, IT goods, electronics, household appliances and automobiles to food items.

Transporting a 40-foot container of sea cargo from Shanghai to Dubai now costs a record $6,150, an astronomical 700 per cent escalation in the past 15 months.

This is expected to continue for many months to come; Trade analysts estimate a sustained surge in new container capacity will ease price pressures, but not before 2023.

Freight Traffic:

The State of Global Shipping After Suez Canal Blockade

The freight and logistics industry suffered a blow in March 2021 when the Ever Given (one of the world’s largest container ships) blocked the Suez Canal for an entire week causing an estimated $3.6 billion in global economic damages.

The vessel was traveling from China to the Netherlands, carrying over 18,000 shipping containers when it ran aground 10 km from the Canal’s red sea entrance. The ship became wedged diagonally across the 250-meter-wide passage.

The United Nations Conference on Trade and Development estimated that the global economic damage is somewhere between $2.2 - 3.9 billion.

Since the 1960s container shipping has been the primary way to move goods globally, this is due to how swiftly loading and unloading occurs and subsequently making sea and land transport more efficient.

The incident reminded the world of just how important the Suez Canal is. The primary role of a canal is as a shortcut to help connect regions.

Uganda, Congo Commission New Road

President's Yoweri Kaguta Museveni and Felix Antoine Tshisekedi recently commissioned a 223km road to connect the two countries. Several agreements were signed between the two countries that will enable boost trade.

The two leaders met at the border point of Mpondwe and further urged the contractors, Uganda has committed to paying 20 per cent of the project's total cost.

The leaders of the two nations also hope that the new road construction will also strengthen other relations such as security and agriculture.

COVID-19 Update:

Uganda embarks on a 42-day lockdown

In a bid to control the surge in corona virus cases in the country the President and Government of Uganda have enforced new tighter movement restrictions by suspending all public and private transportation has been suspended for 42 days with the exception of cargo, those carrying sick patients and essential workers.

All places of worship, sports and other social gatherings are suspended, along with a strict ban on inter-district travel.

Curfew has also been brought forward to an earlier time of 1900hrs/7:00pm.

All restrictions are to remain in place until the President and his task force review based on how the pandemic will stand at the time.

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