Rising freight costs and container costs now seem to be worrying pharma companies. This is something that is not new, because as a whole, costs in terms of logistics have been rising since COVID-19. But the fear, according to companies is the trajectory of the logistic costs and the subsequent margin pressure that they could probably now face.
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Now freight costs, remember around 0.5 to around 3.50 percent of company's costs, it really depends on the exports and the geographies that they basically export to as well.
But to put the rise into perspective, freight costs have risen by almost 300 percent during this COVID pandemic period. Now, companies have been partially passing on costs and sharing costs with suppliers.
To give an idea in terms of the cost rise itself, shipping freight rates for say a 20 feet container, which is basically used by pharmaceutical companies for India to the US has risen by almost 300 percent.
Similarly, India to the US air freight cost has risen around 119 percent , India to Brazil 186 percent approximately and India to Europe up over 40 percent.