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  • Writer's picturejohn snell

The Freight Boom, a gold rush for some but not for all.

This week the Freightos Baltic Index shows a dip in container rates, Hooray! But wait, still 320% over a year ago and still a gazillion % over pre covid rates, thanks very much shipping lines!

Now, feel free to shoot me down but the covid excuses are overblown. Of course there has been a major impact on global everything and, from a point of relevance, shipping schedules, port slowdowns and container imbalances have all resulted. So the cost of correcting this is the above???

No, is the answer. Of course there is cost associated with remediating imbalances in cargo and there is, as we are all witness to, growing consumer demand during this pandemic period BUT while government coffers are emptied trying to protect citizens impacted by lockdowns and worse, there is a sector that is benefitting, I would argue, out of dignified proportion to the events. Herewith a couple of stock charts from shipping lines, no names mentioned, because it doesn't matter who you pick.

The biggest opportunity appears to have been the real need for competing shipping lines to open dialogue on how to address the real trade route imbalances that occurred earlier on in this extraordinary period. This reason to talk appears to have morphed to something a little more organized and dare I say a little more organized.

Ultimately, our business is tea and other botanicals and the impact of the above is ruinous for the sustainability of many commodities, where the cost of freight is now approaching or exceeding (in some cases) 50% of the cargo value. And despite the de facto force majeur "initial" reason for these increases, these are not being picked up down the supply chain but rather pushed back up, to those who enjoy the smallest margin in the chain.

With tea origins having such a bumpy ride currently, due low current Global pricing and their own covid related issues, it is particularly difficult to be faced with restricted access to market and where available, only for a King's ransom.

It is understandable that companies, involved in transportation, will focus where the spoils are greatest and where "Dead heading" is not an issue but the international community and state Governments need to find their moral compass and ensure that the profits of a few do not displace the preservation of sustainable livelihoods everywhere.

And yet, so far the only squeaks we here are made by leaders trying to ensure enough "clobber" is available for sale during the festive period for those that have the comfort to think of such non-essential purchases.

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