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Covid effects on freight could be long-term, says WTO

[ August 14, 2020   //   ]

The increase in air freight prices during the Covid pandemic is likely to subside only with a rebound in passenger transport, according to an information note published by the World Trade Organisation (WTO). In the report on the pandemic’s impact on key components of trade costs, it warns that higher costs may persist even after it is contained.

It argues that aviation industry consolidation and shifts in passenger appetite for travel could lead to higher air transport costs.

WTO adds that while sea and land transport have not faced comparable shocks, maritime transport has seen a decrease in numbers of sailings, while international land transport has been affected by border closures, sanitary measures and detours. Maritime and land transport have remained largely functional, although there have sometimes been considerable delays, but air freight transport has been severely disrupted, with global air cargo capacity shrinking by almost a quarter in March 2020.

But it also notes crisis-induced shift towards the digitalization of customs and regulatory procedures to reduce physical contact could potentially lower trade costs in the long-term.