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Shipping costs have soared and global import prices are set to rise nearly 11 pe

According to a report by the United Nations Conference on Trade and Development (UNCTAD), soaring global container freight rates are likely to push up global consumer prices by 1.5 percent and import prices by more than 10 percent next year. Consumer prices could rise by 1.4 percentage points and industrial production could be knocked down by 0.2 percentage points.


"Until shipping business returns to normal, the current surge in freight rates will have a profound impact on trade and undermine socio-economic recovery, especially in developing countries," said Rebecca Grynspan, UNCTAD Secretary-General.


01 Overall global consumer prices will rise by 1.5 per cent


With the gradual recovery of the global economy after COVID-19, shipping demand has surged, but shipping capacity has been difficult to recover to pre-epidemic levels. The contradiction has led to soaring shipping costs this year.


For example, the SCFI spot price on shanghai-Europe routes, which was less than $1,000 per TEU in June 2020, jumped to about $4,000 per TEU by the end of 2020, and jumped to $7,395 by the end of July 2021. On top of that, shippers face shipping delays, surcharges and other costs.


"Unctad's analysis shows that a sustained surge in container freight rates between now and 2023 would lead to a 10.6 per cent increase in the global import price level and a 1.5 per cent increase in the consumer price level," the UN report said.


Price increase


Surging shipping costs affect different countries differently, with smaller countries that import more of their economies generally suffering more. Small island developing states (SIDS) will be hardest hit, with consumer prices rising by 7.5 percentage points due to surging shipping costs. LLDC consumer prices are likely to rise by 0.6%. In the least developed countries (LDC), consumer prices are likely to rise by 2.2%.


02 Import prices and consumer prices are affected differently in different types of countries



By country, consumer prices will rise 1.2 percentage points in the US and 1.4 percentage points in China as shipping costs soar. By product category, prices of electronics, furniture and clothing were the most affected by the rise in shipping prices, rising by at least 10 per cent worldwide.


03 Economic growth and industrial production will also suffer


Soaring container shipping costs will also weigh on economic growth in major economies, the analysis said. If supply chain disruptions continue, a 10% increase in container rates will lead to a 1% decline in industrial production in the U.S. and the euro zone, and a 0.2% decline in Chinese production, the report said.


According to Kuehne+Nagel, a Swiss logistics giant, more than 600 container ships were stuck outside ports around the world by the end of October, double the level at the start of the year. Late last month, the company predicted congestion at ports and routes would continue through at least February.


04 Supply chain crisis to what extent?


The coldest Thanksgiving in history, supermarkets limited the purchase of daily necessities: the timing is close to Thanksgiving and Christmas shopping holidays in the United States, but many shelves in the United States cannot make up for the shortage, which would have only happened in the run-up to Christmas, but began to grow two months earlier. As global supply chain bottlenecks continue to affect U.S. ports, highways and rail traffic, the White House has acknowledged that consumers will face more shortages during the 2021 holiday shopping season.


The global supply chain is facing a serious crisis. American stores, supermarkets and even hypermarkets are often out of stock these days, ranging from food, drinks, clothing and daily necessities. Supermarket shelves are not replenished, the choice of goods is reduced, and stores are not sure when they will be replenished, or even remove shelf labels. Major supermarket chains have also reinstated "purchase limits," limiting purchases of necessities like toilet paper, as they did at the start of the outbreak. The supply chain crisis is weighing heavily on the global retail and transportation industries, with some companies issuing a series of downbeat forecasts and the fallout spreading.


Mall shelves sold out


The White House is trying to get the nation's ports, railways and roads out of trouble and address shortages of everything from meat to semiconductors. But U.S. officials are still warning of higher prices and severe shortages in the 2021 Christmas shopping season, and while American consumers are not used to empty shelves, it will take some flexibility and patience.


How did this crisis come about? There are multiple reasons for goods not being delivered immediately to the United States. The first is the shortage of containers, which has led to prices 10 times higher than before. According to Time magazine, a 40-foot container shipped from China to the United States before the pandemic cost about $4,700, which rose to $21,000 in August. It now costs more to ship goods from where they are made to the United States.


The blockage on the West Bank is so severe that it takes a month for cargo ships to unload: the blockage is still serious. The cargo ships lining up on the west coast of North America can take up to a month to dock and unload, and all kinds of consumer products such as toys, clothing, electrical appliances and other goods are in short supply. In fact, the us port blockage has been serious for more than a year, but it has been getting worse since July. Lack of workers: Lack of workers slows unloading at ports, slows trucking, and replenishes goods far faster than demand.


Us retailers Order Early but Still Don't Deliver goods: Us retailers are pulling out all the stops to avoid severe shortages. Most companies order ahead of time and build inventory. According to Ware2Go, a delivery platform owned by UPS, as many as 63.2 percent of merchants ordered early for the year-end 2021 holiday shopping season before August, with some 44.4 percent ordering higher than usual and 43.3 percent earlier than usual. But 19 percent were still worried that their goods would not arrive on time.


Grab the goods


There are even operators to charter their own ships, air freight, try every means to speed up logistics. Wal-mart, Costco and Target, for example, are employing their own ships to transport thousands of containers from Asia to North America. Costco chief Financial Officer Richard Galanti said it currently employs three ships, each of which is expected to carry 800 to 1,000 containers. However, if only small and medium-sized retailers or emerging brands cannot directly negotiate with shipping companies, they cannot afford to hire their own cargo ships and air freight because of the high cost. Renting a cargo ship can cost $1m - $2m a month.


The global economy, barely recovering from the chaos caused by the pandemic, faces severe shortages of energy, components, products, labor and transportation. With no sign of a resolution to the global supply-chain crisis, and surging production costs that will make price increases evident to consumers, the U.S. is likely to have a rough holiday season.

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