The United Nations has warned that rising transport costs due to fractured global supply chains will continue to fuel inflation around the world and disproportionately affect the economies of developing nations.
The rate hikes are likely to push global consumer prices up another 1.5% if they remain high for the year, the United Nations Conference on Trade and Development estimated in a report Thursday, according to estimates by the United Nations Conference on Trade and Development. next.
The boom in cargo demand caused by the pandemic, combined with supply chain disruptions from congested ports to the Suez Canal, has sent freight rates to record highs, about five times the average. In the century.
But developing countries that are dependent on imports will be dealt a bigger blow from high transportation costs. The report shows that consumer prices are expected to increase by 2.2% for the world’s 46 least developed countries and 7.5% for small island developing nations such as Fiji, Mauritius and Jamaica.
“The impact on prices in developing countries, especially small developing islands, is five times higher,” said Shamika Sirimanne, Unctad’s chief technology and logistics officer. “This is a real concern.”
With prices for everything from steel to energy soaring, central banks are assessing whether inflation is likely to subside once supply chain bottlenecks are cleared.
UK inflation rose to 4.2% in October, the highest level in nearly a decade, increasing interest rate pressure on the Bank of England. In the US, consumer prices rose 6.2%, the fastest since 1990, while eurozone inflation was at a 13-year high of 4.1%.
Jan Hoffmann, Director of Commercial Logistics at Unctad, says that the shipping industry is trending towards minimizing its contribution to inflation. Operators often cite that it only takes a few cents to send a pair of shoes from China or a bottle of wine from Australia to Europe or the US, implying that a multifold jump is relatively insignificant for people. consumption.
But Hoffmann said the large scale of cargo being shipped by containers has caused freight rates to rise in relation to the global inflation debate.
“If we look at the inflation targets in Europe and the US, 1.5% is significant,” he said.
The impact of transportation costs on the price consumers pay varies considerably depending on the product. Those underpinned by complex global supply chains like computers, as well as cheaper bulky items including furniture and textiles, are likely to be at least 10 percent more expensive, the report said. due to high shipping costs.
Container freight rates have fallen in recent weeks as the peak season has ended, but are still very high.
Sea-Intelligence, a maritime consulting firm, forecast this week that it could take up to 30 months for rates to return to normal due to the depth of the supply chain crisis.
Sirimanne warned that further consolidating the logistics of ocean carriers, which are already generating bumper profits, could make higher shipping prices “stickier”.
She called on governments to support Covid-19 vaccination efforts in developing countries to help ease pressure on supply chains and prices.