Unctad predicts two years of inflation due to the high cost of maritime transport

The general prices of the global shopping basket will rise on average by 1.5% until 2023 in relation to the pre-pandemic levels due to the current rise in the cost of maritime transport, which moves 80% of these products and continues to be affected by the pandemic and production bottlenecks.

This is the main conclusion issued by the United Nations Conference for Trade and Development (Unctad) in its report on maritime traffic, at a time of concern about the situation of the global supply chain, not yet adapted to the strong demand that the pandemic unexpectedly brought.

Maritime trade in need of change

The report predicts “dramatic increases in freight rates, significant price increases for consumers and importers and possible changes in trade patterns due to trade tensions and the search for greater resilience”.

“Returning to normal would require investing in new solutions, including infrastructure, freight transport technology and digitization, or trade facilitation measures.“, Suggested in the presentation of the report the secretary general of the Unctad, Rebeca Grynspan.

The United Nations emphasizes that if the current problems in maritime traffic continue, world import prices will increase 11%, as a consequence of the rise in freight prices.

For example, the report indicates, the cost of shipping containers from the Chinese port of Shanghai to Europe, one of the main trade routes, was US $ 1,000 per TEU in June 2020, a figure that increased to US $ 4,000 from the end of that year and touched US $ 8,000 in the middle of the current one.

These increases end up affecting consumers, who “they will have 1.5% less money in their pockets”In 2023, explained the lead author of the study, Jan Hoffmann, expert in trade and logistics of the Unctad.

The increases would be noticeable especially in low value-added goods (furniture, textiles …) for which a price increase of 10.2% is expected, although there would also be important increases in plastic products (9.4%), vehicles (6.9%) or machinery (6.4%), among others.

Growth brake

The report also foresees a slowdown in the growth of maritime trade, which after having increased to an annual average of 2.9% in the last two decades will grow only 2.4% annually between 2022 and 2026, according to UN estimates.

In 2020, a year marked by the COVID-19 pandemic and which left 400,000 sailors in the cargo sector stranded for months due to sanitary measures, maritime trade plummeted 3.8%, although it has rebounded 4.3% in the 2021, a rate that will be reduced to 3.2% in 2022 and 2.4% in 2023, the report calculates.

The rise in prices and the slowdown in the growth of maritime trade are due in part, according to those responsible for the study, to the increase in demand for products that has occurred due to the pandemic.

“There was more demand than expected: at first it was thought that it would decrease as it happened in the financial crisis of 2008, but it grew in places like the United States or Europe”, He explained Hoffmann.

Although the demand for services fell, the demand for products grew, which need much more from maritime trade: “People could no longer go to the restaurant, the cinema or the hairdresser, so they bought things, something now very easy thanks to e-commerce”He added.

To this have been added problems on the supply side derived from the health crisis: prevention measures have increased docking time in ports, thereby delaying shipments, to the point that a container ship takes on average 20% more time to reach your destination.

“The biggest bottlenecks occurred on the West Coast of the United States in the first half of 2021, and from there it had an impact around the world.“Said the director of technology and logistics of the Unctad, Shamika Sirimanne.

Suez made things worse

Other factors have contributed to supply problems, such as general delays in March caused by the multi-day grounding of the cargo ship Ever Given, thereby blocking the Suez Canal, one of the main transit points for freight transport. world.

To this is added, explains Hoffmann, the decarbonisation process that maritime transport is trying to undertake to help curb global warming.

The easiest way for these ships to do this is to reduce their speed, thereby emitting fewer pollutants, another factor that increases costs and delays the overall assembly line.