The UN (United Nations) has warned that the increase in shipping costs resulting from problems in the global supply chain will further fuel inflation around the world and will have a disproportionate effect on the economies of developing countries.
The soaring cost of freight should raise world consumer prices by an additional 1.5%, if the high continues over the next year, according to estimates by Unctad, the United Nations Conference on Trade and Development, in a report published on Thursday (18).
The pandemic-induced boom in demand for goods, combined with supply chain disruptions such as port congestion and the blockage of the Suez Canal, has sent freight soaring to record levels, equivalent to about five times its average value. over the previous ten years.
But developing countries, dependent on imports, are likely to be hit harder by rising shipping costs. Consumer prices are expected to rise by 2.2% in the 46 least developed countries on the planet, and by 7.5% in small countries like Fiji, Mauritius and Jamaica, according to the report.
“The impact on prices in developing countries, especially island countries, is five times stronger,” said Shamika Sirimanne, director of technology and logistics at Unctad. “And that’s a real concern.”
With prices soaring in just about everything from steel to energy, central banks are trying to determine whether inflation will settle once the problems in supply chains are resolved.
UK inflation soared to 4.2% a year in October, its highest in nearly ten years, adding pressure on the Bank of England to raise interest rates. In the United States, consumer prices rose by 6.2%, their fastest rate of increase since 1990, while eurozone inflation is at 4.1%, its highest point in 13 years.
Jan Hoffmann, director of trade logistics at Unctad, said the shipping sector tends to minimize its contribution to inflation. Industry executives often mention that it costs just pennies to ship a pair of shoes from China or a bottle of wine from Australia to Europe or the United States, implying that the spike in costs is relatively insignificant for consumers.
But Hoffmann said the vast scale of goods transported in containers makes the rise in freight a relevant debate for global inflation.
“If you look at inflation targets in Europe and the United States, 1.5% is significant,” he said.
The impact of shipping costs on the prices paid by consumers varies significantly depending on the product. Items whose production involves complicated global supply chains, such as computers, as well as mass-manufactured products such as furniture and textiles, are likely to see prices rise by at least 10% because of skyrocketing cost of goods. freight, according to the report.
Container freight rates have dropped in recent weeks as the peak season has come to an end, but remain extremely high.
Shipping consultancy Sea-Intelligence this week predicted it could take up to 30 months for freight to return to normal, given the depth of the crisis in supply chains.
Sirimanne warned that if consolidation among ocean shipping companies continues, with the help of the windfall profits they have been accumulating, higher shipping prices could become “lasting”.
She urged governments to support Covid-19 vaccination efforts in developing countries to help alleviate price and supply chain pressures.
Translation by Paulo Migliacci
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