Rising shipping costs to drive consumer price inflation, says UNCTAD

A view shows a container ship in the port of Baltimore, Maryland, November 10, 2021.

Evelyn Hockstein | Reuters

“UNCTAD’s analysis shows that the current increase in freight rates for containers, if maintained, could increase the global import price level by 1[ads1]1% and the consumer price level by 1.5% between now and 2023, the UN report said on Thursday.

For each country, the US will see consumer prices rise by 1.2%, while China will see an increase of 1.4%, the report says. The analysis found that smaller countries more dependent on imports would see consumer prices rise by much higher 7.5%.

By product, electronics, furniture and clothing will see the largest price increases – at least 10% globally – due to distribution chain supply, UNCTAD said, noting that containers account for 17% of total seaborne trade volume.

Some companies have chosen to ship smaller products by air due to the sky-high shipping costs, although air freight tends to be more expensive.

The increase in container freight costs will also slow down growth in large economies, the analysis said.

Industrial production, a major driver of growth, is set to fall by more than 1% in the US and the euro area, and fall by 0.2% in China, if container freight rates rise by 10% and supply chains remain disrupted, the report said.

At the end of October, more than 600 container ships were stranded outside ports around the world, twice as high as at the beginning of the year, Swiss logistics giant Kuehne + Nagel told CNBC’s “Squawk Box Asia”. The company estimated late last month that the congestion would last until at least February.

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