Logistics: Cost Increases Forecast for 2021

Mandatory use of low-sulfur fuel by ships, shortage of containers and priority for medical supplies and vaccines will push up sea and air freight costs.

Monday, December 21, 2020

Although since the beginning of 2020 it is mandatory for vessels to use fuels that do not exceed 0.5% sulfur concentration, sector businessmen forecast that during the next year this regulation will continue to influence the escalation of operating costs in the logistics sector.

Another factor that will push up maritime transportation costs is the low availability of containers, which is partly explained by the imbalance of world trade flows, which are still affected by the health and economic crisis generated by the spread of the covid-19.

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Javier Ayala, president of the Salvadoran Association of Cargo and Forwarding Agencies (ASAC), told Elmundo.sv that "... There is a commercial flow coming from Asia, which was the first to start recovering, from where many medical supplies are moved and there is an imbalance of equipment (containers), which ended up in the ports of the world."

Ayala added that "... the still weak recovery of the flows makes that these containers still cannot return because of the lack of merchandise. This imbalance is what causes the shortage of containers, especially in Asia."

According to the director of the Asac, it is expected that in the first quarter of 2021 the costs of transporting cargo from Asia will triple, a situation that will force companies to seek suppliers in markets closer.

The urgency of transporting vaccines, supplies and medical equipment, will be the main reason for a significant increase in air freight rates in general next year.

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