Soaring Air Freight and Fresh Food Price Volatility: Intensifying Global Supply Chain Instability

The recent sharp increase in air freight rates is immediately impacting the import prices of fresh food, once again exposing the vulnerability of global supply chains. This is more than just a rise in logistics costs; it foreshadows widespread repercussions for food security and consumer prices.

New Challenges to Global Supply Chains: Soaring Air Freight Rates

According to Hankyeong, the surge in air freight rates is leading to higher import prices for fresh food. This is a result of a complex interplay of factors, including the Russia-Ukraine war, geopolitical instability in the Middle East, and ongoing climate change leading to reduced production. Air transport plays a crucial role in the transportation of agricultural and marine products that require freshness, so rising freight rates directly impact consumer prices.

Deepening Volatility in Fresh Food Prices

Vulnerability of the South Korean Economy with High Import Dependence

South Korea is a country with a low food self-sufficiency rate and a high dependence on imports. Therefore, international logistics cost increases inevitably have a greater impact on domestic consumer prices. In particular, as fresh food prices are highly volatile, the rise in air freight rates will directly burden consumers' dining economy.

Impact of Climate Change: Reduced Production and Lower Quality

Climate change is causing reduced agricultural yields and lower quality, which can lead to shortages of fresh food. Extreme weather events can drastically reduce production in certain regions, fueling price increases in international markets. This situation, combined with rising air freight rates, will further exacerbate the volatility of fresh food prices.

Investment Strategy and Outlook

Consider Investing in Food-Related Industries

In a situation where global supply chain instability continues, investing in food production, distribution, and processing-related industries can be an alternative to expect stable returns. In particular, companies that increase production efficiency through technological innovation or focus on developing alternative foods have high long-term growth potential.

Outlook for Logistics and Transportation Companies

Rising air freight rates can improve the profitability of air transport companies, but they are also subject to the influence of other factors such as rising fuel prices and labor costs. Therefore, when investing in logistics and transportation companies, it is necessary to comprehensively consider the company's competitiveness, financial soundness, and risk management capabilities.