UN warns of soaring prices in 2022 due to freight rate spike
Published: 04:11 PM,Nov 18,2021 | EDITED : 08:11 PM,Nov 18,2021
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Geneva – The United Nations warned Thursday that a surge in container freight rates could mean higher prices for consumers next year unless pandemic-fuelled problems are untangled.
The UN's trade and development agency (UNCTAD) said global import price levels could increase by 11 per cent and consumer price levels by 1.5 per cent between now and 2023.
'Global consumer prices will rise significantly in the year ahead until shipping supply chain disruptions are unblocked and port constraints and terminal inefficiencies are tackled,' UNCTAD said in its Review of Maritime Transport 2021 report.
Global supply chains faced unprecedented demand from the second half of 2020 onwards as consumers spent on goods rather than services during coronavirus lockdowns.
But the upswing in demand hit several practical constraints, including container ship carrying capacity, container shortages, labour shortages, congestion at ports and Covid-19 restrictions.
The mismatch led to record container freight rates 'on practically all container trade routes', according to the report.
'The current surge in freight rates will have a profound impact on trade and undermine socioeconomic recovery, especially in developing countries, until maritime shipping operations return to normal,' said Rebeca Grynspan, UNCTAD's secretary general.
'Returning to normal would entail investing in new solutions, including infrastructure, freight technology and digitalisation and trade facilitation measures,' she said.
UNCTAD said the pandemic had magnified pre-existing industry challenges, particularly labour shortages and infrastructure gaps.
It also exposed vulnerabilities, such as when China's Yantian Port shut in May due to a coronavirus outbreak, causing significant delays, or when the giant container ship Ever Given blocked the Suez Canal in March, snarling global trade.
Maritime trade rebound
Still, the pandemic's impact on maritime trade volumes last year was less severe than initially expected, UNCTAD said.
Maritime trade contracted by 3.8 per cent to 10.65 billion tons in 2020, and is projected to increase by 4.3 per cent in 2021.
UNCTAD said the medium-term outlook remained positive but was subject to 'mounting risks and uncertainties'.
The agency predicted that annual growth will slow to 2.4 percent between 2022 and 2026, compared to 2.9 percent over the past two decades.
'A lasting recovery... largely hinges on being able to mitigate the headwinds and on a worldwide vaccine roll-out,' said Grynspan.
The UN's trade and development agency (UNCTAD) said global import price levels could increase by 11 per cent and consumer price levels by 1.5 per cent between now and 2023.
'Global consumer prices will rise significantly in the year ahead until shipping supply chain disruptions are unblocked and port constraints and terminal inefficiencies are tackled,' UNCTAD said in its Review of Maritime Transport 2021 report.
Global supply chains faced unprecedented demand from the second half of 2020 onwards as consumers spent on goods rather than services during coronavirus lockdowns.
But the upswing in demand hit several practical constraints, including container ship carrying capacity, container shortages, labour shortages, congestion at ports and Covid-19 restrictions.
The mismatch led to record container freight rates 'on practically all container trade routes', according to the report.
'The current surge in freight rates will have a profound impact on trade and undermine socioeconomic recovery, especially in developing countries, until maritime shipping operations return to normal,' said Rebeca Grynspan, UNCTAD's secretary general.
'Returning to normal would entail investing in new solutions, including infrastructure, freight technology and digitalisation and trade facilitation measures,' she said.
UNCTAD said the pandemic had magnified pre-existing industry challenges, particularly labour shortages and infrastructure gaps.
It also exposed vulnerabilities, such as when China's Yantian Port shut in May due to a coronavirus outbreak, causing significant delays, or when the giant container ship Ever Given blocked the Suez Canal in March, snarling global trade.
Maritime trade rebound
Still, the pandemic's impact on maritime trade volumes last year was less severe than initially expected, UNCTAD said.
Maritime trade contracted by 3.8 per cent to 10.65 billion tons in 2020, and is projected to increase by 4.3 per cent in 2021.
UNCTAD said the medium-term outlook remained positive but was subject to 'mounting risks and uncertainties'.
The agency predicted that annual growth will slow to 2.4 percent between 2022 and 2026, compared to 2.9 percent over the past two decades.
'A lasting recovery... largely hinges on being able to mitigate the headwinds and on a worldwide vaccine roll-out,' said Grynspan.