…Sky News Australia Business Editor Ross Greenwood says.
The cost of freight is at all-time high levels
Okay… but while these are all signs our economy is reopening, there’s another pressure getting goods in and out of the country. There’s rolling industrial action at patrick’s terminals around the country, but there’s also the cost of freight that’s going through the roof, here and overseas, right?
So, it all went very well with the re-opening of the borders and all that type of thing, but freight costs not just in Australia, but around the world, have gone bonkers.
Hence there could be shortages of goods in the stores; and this is, as a result of really the cost of actual containers themselves – the cost of bringing a 40-foot container has gone through the roof.
Now… you’re right to talk about the industrial action on the ports, because that’s only exacerbating this situation. So I did speak today with one of the leading experts in this whole freight forwarding area – Paul Zillai. Here is what he had to say about this current situation and the cost of freight coming into and out of Australia.
Freight Costs to Australia Went Up
From what was literally a few hundred dollars is now thousands of dollars. So you’ve got a situation now, say, from Shanghai to get into the east coast of Australia – it’s costing you up to about 8.5k dollars for the freight of a 40-foot container. And that’s significant, but the pricing in other parts of the Northern Hemisphere – it’s attracting much higher rates again!
Container Shortages and
Even Higher Freight Costs on European and American Routes
So just to explain that – one of the real problems is trying to get the containers themselves, because what’s happening is the prices are even more bonkers on the American to European routes, and a lot of containers are being diverted to those routes rather than coming down to Australia. And that’s the reason why some of these shortages of goods could go on for some time.
Which of course means the poor punter ends up paying more for what they can get access to.
Freight Prices and Inflation
And that’s the problem – if there’s systemic issues in terms of inflation and price (guess what that means) through the central banks and the reserve bank suddenly have to look at this and say this is going to be around for a long time, not a short time. That’s the big issue, and that’s the big worry for markets and one of the reasons why they start to wobble when they start to feel that interest rates might be rising sooner rather than later.
