The resulting increase in air freight prices is likely to subside only with a rebound in passenger transport, according to a report by the World Trade Organisation (WTO).
Global air cargo capacity shrank by 24.6 per cent in March 2020, as passenger flights account for around half of air cargo volumes due to the pandemic, the World Trade Organisation (WTO) has revealed in a note.
The note estimates that travel and transport costs account for as much as a third of trade costs depending on the sector.
“Pandemic-related travel restrictions are therefore likely to affect trade costs for as long as they remain in place,” the note said.
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.
Moreover, business travel, which is important for maintaining trading relationships and managing global value chains, in addition to being a significant economic activity in its own right, is being disrupted.
“The quality of information and communications technology (ICT) infrastructure and digital preparedness will be important in determining how well economies can cope,” the note indicated.