UAE businesses feel heat of huge jump in freight rates
UAE businesses are feeling the heat as freight rates have increased 25 to 30 per cent due to reduced international flights and shortage of containers, threatening global economic recovery.
Shanghai Containerised Freight Index jumped 124 per cent in seven months from 829.29 on April 17, 2020 to 1857.33 on August 13.
The cost impact of a 25-30 per cent increase in freight costs in October alone is being felt across industries. Air freight is also up by 30-40 per cent owing to reduced international flights due to the Covid-19 pandemic.
Rizwan Sajan, founder and chairman of Dubai-based Danube Group, said international trade has been badly affected over the last few months due to a huge jump in freight rates that threaten global trade and economic recovery.
He asked shipping companies and freighter service providers to lower charges at a time when businesses worldwide and the global economy as a whole suffers from the blows of the unprecedented Covid-19 crisis.
“Freight charges usually decline when the demand for goods are less. Following Covid-19, freight charges have skyrocketed up to 124 per cent… The current freight rates, if continue, will force traders to increase prices of commodities that will push up prices at the wholesale and retail level as well – making things more expensive on the shelves,” said Rizwan Sajan.
“Similarly, this will reflect on the building materials prices and escalate the cost of building homes,” he added.
“I ask the shipping agencies to reduce the freight rates in line with the market demand and supply. The current freight rates are hurting importers and adding to our costs – making products more expensive,” said the Danube chairman.
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