DUESSELDORF – Deutsche Post, a German logistics company (OTC:), stated in an interview that DHL expects freight costs to remain steady this year. DHL is urging customers to enter into longer-term contracts to protect themselves.

Tim Scharwarth stated to Reuters that although the rate in the near-term will be higher for ocean and air freight, it will likely stay at the level of 2021.

The rate for air freight might rise a bit in the short-term, as there is less space.

The COVID-19 Pandemic severely disrupted the global supply chain, slowing down flow of raw materials and consumer goods.

Shipping costs have increased globally due to a shortage of ocean freight capacity and an increase in air freight. Port waiting times are also being extended by the pandemic because of traffic and labor disruptions.

FedEx Corp, a US rival (NYSE:), warned this month about the Omicron coronavirus variant’s rising incidences. This has led to staff shortages as well as delays for shipments on planes.

Scharwarth declared that “in sea freight we will not return the rates we had prior to the coronavirus crise.”

He said, “If you are looking to export a stool to China for 10 Euros then it can be a challenge due to transport costs.” This will force some businesses to reevaluate their business models.

Scharwarth suggested that customers enter into contracts over a period of two to three years in order to be protected against rising prices: “You purchase stability through long-term commitment.”

DHL’s freight unit anticipates that high rates will continue to boost profits in 2022. Scharwath stated, “Our goal is for the operating result to be at least the same high level as we had in the first nine month of 2021.”

Scharwath has made the division a profitable profit-generating unit, employing more than 42,000 people.

The operating margin should be maintained at 5.5% or higher by 2025. In the nine first months of 2021, the unit had a margin 5.7%

DHL states that the freight department is ahead Kuehne+Nagel on the air freight market, while Kuehne+Nagel ranks second behind it in seafreight.