Shenzhen's lockdown and the ongoing Ukraine war are setbacks to the recovering logistics industry. In this article by Lianhe Zaobao, our Commercial Director, Edwin Lim, discusses the implications they made both on the global supply chain front and on PLG.
He shares that air freight has been impacted with Ukraine's airspace closed and airlines avoiding Russian airspace. This flying ban has removed 16.1 million km of airspace from international freight routes, severely limiting air traffic and dramatically reducing the cargo capacity of airlines. Shipping routes are also equally affected and are being re-routed in light of port closures. This has resulted in both airlines and shipping lines taking alternate and longer routes, consuming more fuel.
In addition to the war in Ukraine, he mentions that the Shenzhen lockdown further adds to the uncertainty of the logistics industry. While China's main ports remain open and ships continue to dock, congestion is increasing, and some container ships are rerouting to avoid anticipated delays. He noted that ocean freight rates are likely to rise, while freight shipment delays are expected to lengthen, stretching an already strained industry.
Edwin shares that this, combined with the sanctions on Russian oil and gas, has resulted in a 30% increase in transportation costs on PLG's end, and PLG is bracing for another wave of freight rate increases which are already five-fold higher than pre-pandemic levels. As long as these disruptions continue to persist, he expects these rates to remain or continue surging, at least through the end of the year.