Global freight market insight
Global Freight Market Insight
Inflation and rising gasoline prices roil markets
Soaring inflation coupled with volatility in diesel prices has adversely affected global supply chains. The recent shift has affected sourcing and sourcing due to rising costs, coupled with a weaker dollar. No mode of transport or service will be affected by these fuel price increases. The difference, however, is the speed at which fuel rates change.
Air freight charges are usually invoiced at current market rates
Sea freight will not be revised until the end of Q2 fuel surcharge
Inland costs may vary depending on how much fuel the carrier is willing to absorb
All indications are that operators will seek to pass on fuel costs as a by-product of bad earnings from COVID-19.
US inflation and diesel prices
Crude oil prices hit record levels, prompting a rise in natural gas prices across the United States. The national average price for a gallon of diesel in the U.S. was $4.85 in the first week of March, the highest price since the summer of 2008. Carriers have introduced additional fuel surcharges of 40-50% to offset diesel costs.
Crude oil prices rose 37.97% in the past 30 days
There are several important factors behind the rise in natural gas prices:
1. Russia is one of the largest oil exporters
2. Sanctions on Russian oil and gas affect global commodity markets
3. Pandemic-related oil production remains low
4. Takes time to scale up production
5. Supply chain challenges and labor shortages persist
Oil prices may continue to rise as the Russia/Ukraine war unfolds. Brent crude has surged above $110 a barrel in the past week, and fuel surcharges on ship routes could be imminent as fuel prices reach all-time highs. The current volatility of crude oil prices shows the uncertainty of the global energy landscape.
Which solutions should you consider:
1. Price transparency - control your accruals by ensuring you have a clear view of your fees
2.Analyze your import weight, volume and cost to confirm that your purchases are equal to or higher than your Economic Order Quantity (EOQ) to avoid minimum charges and take full advantage of maximum charges
3. Advanced planning and discussions
