According to a report by the United Nations Conference on Trade and Development (UNCTAD), the surge in global container freight rates may cause global consumer prices to rise by 1.5% next year, and import prices to rise by more than 10%. As a result, China’s consumer prices may rise by 1.4 percentage points, and industrial production may be dragged down by 0.2 percentage points.
UNCTAD Secretary-General Rebeca Grynspan said: “Until maritime shipping operations return to normal, the current surge in freight rates will have a profound impact on trade and Undermining socio-economic recovery, especially in developing countries.”
Global consumer prices will The overall increase was 1.5%
As the global economy gradually recovers after the COVID-19 epidemic, shipping demand has surged, but shipping capacity has always been difficult to return to pre-epidemic levels. This contradiction has caused almost all shipping costs to skyrocket this year.
For example, in June 2020, the spot price of the Container Freight Index (SCFI) for the Shanghai-Europe route was less than US$1,000 per TEU, and by the end of 2020 it had jumped to approximately US$4,000. /TEU, has soared to $7,395 by the end of July 2021. In addition, cargo owners face shipping delays, surcharges and other costs.
The United Nations report stated: “Analysis by the United Nations Conference on Trade and Development shows that between now and 2023, if container freight rates continue to surge, the global price level of imported products will increase by 10.6%, and consumers will The price level will increase by 1.5%.”
Surge in shipping costs will have different impacts on different countries. Generally speaking, the smaller the country, the higher the proportion of imports in the economy. The impact will naturally be greater. Small island developing countries (SIDS) will be hardest hit, with consumer prices rising by 7.5 percentage points due to soaring shipping costs. Consumer prices in landlocked developing countries (LLDCs) are likely to rise by 0.6%. In the least developed countries (LDCs), consumer price levels are likely to rise by 2.2%.
The impact on import prices and consumer prices in different types of countries The impact is different
By country, as shipping costs soar, the consumer price index will rise by 1.2 percentage points in the United States and 1.4 percentage points in China; by product category, electronic products The prices of goods, furniture and clothing are most affected by the increase in shipping prices, with an increase of at least 10% globally.
Economic growth and industrial production will also be affected
o:p>
The analysis also said that soaring container transportation costs will also drag down the economic growth of major economies. The report said that if the supply chain continues to be disrupted, for every 10% increase in container freight rates, industrial production in the United States and the Eurozone will fall by 1%, and China’s industrial production will fall by 0.2%.
Swiss logistics giant Kuehne+Nagel said that as of the end of October, more than 600 container ships were stuck outside ports around the world, twice the level at the beginning of the year. The company predicted late last month that congestion at ports and routes would continue until at least February next year.
To what extent is the supply chain crisis?
The most deserted Thanksgiving in history, supermarkets restrict the purchase of daily necessities: the timing is close to the two major shopping holidays of Thanksgiving and Christmas in the United States. However, many shelves in the United States are not fully stocked. Originally, it would only happen on Christmas The shortage problem on the eve of the holiday actually started to develop two months in advance. Global supply chain bottlenecks continue to affect U.S. ports, highways and rail transportation, and the White House has even admitted that consumers will face more serious shortages during the 2021 holiday shopping season.
The global supply chain is currently facing a serious crisis. Recently, in American stores, supermarkets, and even hypermarkets, everything from food, beverages, clothing to daily necessities are often out of stock. Supermarket shelves are not fully stocked, there are fewer product choices, and stores are not sure when they will be able to restock, and they have even removed shelf labels. Some large supermarket chains have also resumed their “purchase restriction” policies, just like when the epidemic first broke out, limiting the amount of daily necessities such as toilet paper that customers can buy. This supply chain crisis has put great pressure on the global retail and transportation industries. Some companies have recently issued a series of pessimistic speculations, and the impact continues to expand.
The White House is working to free U.S. ports, rail and highway transportation from tight supply issues, from meat to semiconductors. However, U.S. officials still warn that the 2021 Christmas shopping season may face higher prices and severe product shortages. Although American consumers are not used to empty shelves, everything requires some flexibility and patience.
How did this crisis happen? Multiple factors prevent the goods from being delivered to the United States immediately. The first is the shortage of containers. The shortage of containers has caused container prices to be 10 times higher than before. According to Time Magazine, before the epidemic, the asking price for a 40-foot container shipped from China to the United States was about US$4,700, which rose to US$21,000 in August. Now we have to transport the goods from the place of production to the United States.��Have to pay higher costs.
The port congestion on the West Coast is serious, and it takes a month for cargo ships to unload: the port congestion problem is still serious. Cargo ships lined up on the west coast of North America take up to a month to dock and unload, and various consumer products such as toys, clothing, electrical appliances, etc. are out of stock. In fact, the port blockage in the United States has been serious for more than a year, but it has worsened since July. Lack of workers: The lack of workers has slowed down port unloading and trucking, and the replenishment of goods has been far slower than demand.
The U.S. retail industry placed orders in advance, but the goods still cannot be delivered: To avoid serious shortages, U.S. retailers have tried their best. Most companies will order in advance and build inventory. According to data from Ware2Go, a delivery platform under UPS, as early as August, as many as 63.2% of merchants had placed orders in advance for the holiday shopping season at the end of 2021. About 44.4% of merchants had ordered more orders than in previous years, and 43.3% had ordered more orders than before. Order early, but 19% of merchants are still worried that the goods will not be delivered on time.
There are even operators who rent ships and find air transport themselves, trying their best to speed up logistics. For example, Walmart, Costco, and Target all hire their own ships to transport thousands of containers from Asia to North America. Costco Chief Financial Officer Richard Galanti pointed out that it currently employs three ships, each of which is expected to carry 800 to 1,000 containers. However, if they are only small and medium-sized retailers or emerging brands, not only are they unable to negotiate directly with shipping companies, but the cost of hiring cargo ships and air freight is too high, and they cannot afford it. The monthly cost of renting a cargo ship can be as high as $1 million to $2 million.
The global economy has just begun to recover from the chaos caused by the epidemic, but it is facing extreme shortages of energy, components, products, labor and transportation. The global supply chain crisis seems to show no sign of being resolved. Coupled with the surge in production costs, consumers will clearly feel the rise in prices. This Christmas holiday in the United States may not be so easy. </p
