Shipping Rates to Boost Global Inflation by 1.5%, UN Says
The high price of ocean shipping could soon translate into a 1.5% increase in global consumer prices in 2023, with smaller, trade-dependent countries potentially suffering the most, according to the United Nations Conference on Trade and Development.
The Geneva-based agency said shipping rates have increased more than fourfold over the past decade and the current price to ship a 40-foot container unit from China to the U.S. is now 348% higher than the pre-pandemic average.
“If sustained, the current surge in container freight rates will significantly increase both import and consumer prices,” Unctad said Thursday in its annual maritime report.
The UN said it sees no end in sight for the soaring rates for containerized goods, which it expects will remain high because of continued demand, supply-side uncertainties and lingering concerns about port efficiency.
The impact of higher ocean-freight rates could hit consumers even harder in smaller, import-dependent economies that may see a 7.5% cumulative increase in consumer prices, according to the report.
“That means the real income for people living in small island developing states will be 7.5% lower than it would otherwise be,” said Jan Hoffmann, chief of Unctad’s trade logistics branch.
Certain consumer products headed to North America and Europe from Asia -- like computers, electronics and optical products -- will likely see a higher increase in prices than others, according to the report.
Consumers could also see a 10% increase in prices for imports of certain low-value-added goods, such as furniture, textiles, garments and leather goods.
Much of the recent demand for imported goods has been driven by homebound U.S. consumers who spent their stimulus checks on goods like exercise bikes and home-improvement products, the UN said.
The UN said the most important thing governments can do to ameliorate the current shipping crisis is to invest in a global vaccination effort to accelerate the end of the pandemic and stimulate a broad-based economic recovery.
In addition, the report offered several specific policy suggestions for improving the maritime shipping environment, such as:
- improving port infrastructure;
- focusing on economies of scale;
- addressing trade imbalances;
- improving trade facilitation; and
- increasing shipping connectivity.
The UN estimates that significant structural improvements to the maritime shipping sector could reduce transport costs by about 4% and mitigate the impacts of future disruptions.
Return to Normal
The post-pandemic rebound in maritime shipping was relatively swift, when compared with the global financial crisis, because the shock of the pandemic unfolded in phases and at different speeds, with diverging paths across regions and markets.
While the pandemic caused a sharp 3.8% contraction in maritime trade during 2020, volumes for containerized trade and dry-bulk commodities have returned to pre-pandemic levels and the UN said maritime trade growth will increase to 4.3% by year end.
The UN said the upward trend in shipping volumes will gradually slow over the next four years and settle to a rate of 2.4%, which is slightly below the 20-year historical average of 2.9%.
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