The impact of inflation on the cost of international freight transportation
In recent years, inflation has become a serious factor affecting the cost of international freight transportation. Rising prices for goods and services lead to increased costs at all stages of the logistics chain, which negatively affects businesses and consumers.
The main factors influencing the cost:
Rising fuel prices: This is one of the main factors affecting the cost of freight transportation. The rise in the price of gasoline, diesel fuel and aviation kerosene leads to an increase in freight transportation costs.- Rise in the cost of materials: Rising prices for metal, plastic, wood and other materials leads to an increase in the cost of production and repair of vehicles, as well as warehouse equipment.
- Wage growth: An increase in the wages of drivers, movers, warehouse workers and other professionals leads to an increase in logistics costs.
- Currency devaluation: The weakening of national currencies against the US dollar and other leading world currencies leads to an increase in the cost of imported goods and services, which increases the cost of international cargo transportation.
The effects of inflation on business:
- Increased costs: An increase in the cost of freight transportation leads to an increase in the cost of production, which can negatively affect the competitiveness of the business.
- Lower profits: Increased expenses can lead to lower profits or even losses.
- Slowing growth: Rising freight costs may slow down the pace of business growth.
What should a business do?:
- Supplier diversification: Finding suppliers in different countries can help reduce the risks associated with inflation.
- Optimization of logistics: Reviewing cargo transportation routes and methods can help reduce costs.
- Currency risk insurance: Using hedging tools can help protect businesses from currency fluctuations.
- Price increases: In some cases, it may be necessary to raise the prices of products or services to compensate for increased costs.
Forecasts:
The risk of rising inflation is expected to remain high in 2024. This means that the cost of international freight transportation will continue to rise. Businesses need to prepare for this and take measures to reduce the risks associated with inflation.