High freight rates risk jeopardizing global economic recovery

The recovery of the global economy is threatened by high freight rates, which are expected to persist in the coming months, warned the United Nations Conference on Trade and Development (UNCTAD).

« Global consumer prices will increase significantly over the coming year as long as the situation disrupting maritime logistics is not resolved and the constraints crippling ports and terminals are lifted. », Warned UNCTAD in its recent analysis on maritime transport 2021.

The UNCTAD report shows that “ If the current surge in container freight rates were to persist, it could increase global import price levels by 11% and consumer price levels by 1.5% by 2023 ».

« The current surge in freight rates will have a profound impact on trade and undermine socio-economic recovery, especially in developing countries, until shipping operations return to normal“, Warned Rebeca Grynspan, secretary general of UNCTAD, quoted by the report.

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« Returning to normal would mean investing in new solutions, including infrastructure, technology including digitization of freight, and trade facilitation measures.“, She added.

Demand for goods rebounded in the second half of 2020 and into 2021, as consumers purchased goods rather than services during the duration of containment and restrictions linked to the pandemic, the UN agency said, noting that working from home , online shopping and increasing computer sales have all placed unprecedented pressure on supply chains.

This sharp increase in containerized trade flows has come up against capacity constraints on the supply side, including the carrying capacity of container ships, container shortage, labor shortage, restrictions permanent access and exit linked to COVID-19 in port regions and port congestion, the same source noted.

This lag between the explosion in demand and the de facto reduction in supply capacity then led to record freight rates for containers on virtually all trade routes, according to the report.

The impact of high transport costs will be greatest in Small Island Developing States (SIDS), which could see import prices rise by 24% and consumer prices by 7.5%. In the least developed countries (LDCs), the level of consumer prices could increase by 2.2%.

(With MAP)