Analysts predict further food price increases through 2023.
The global economy is recovering slowly amid the COVID-19 pandemic.
In the second half of 2020 and 2021, consumers were spending money on goods rather than services.
The sharply increased demand for purchases in online stores, the transition to remote work, and the growth in sales of computer equipment have led to an unusually high demand for logistics services.
Record demand and reduced supply opportunities have created a situation that has triggered a global rise in freight rates on virtually all routes.
In the coming year, recovery will continue to be threatened by high freight rates, supply chain disruptions, congested seaports and terminal inefficiencies.
Only an increase in the cost of container transportation (if it continues) will lead to an increase in world import prices by 11%, and the level of consumer prices by 1.5% from now until 2023.
The impact of high tariffs on transportation will affect economies in different ways, with small island developing states hitting the hardest.
In such countries, analysts predict an increase in prices for imported goods by 24%, and an increase in consumer prices at the level of 7.5%.
The rise in rates will have a particular impact on goods with low added value: furniture, textiles, clothing, leather goods.
This is due to the fact that partly (to a greater or lesser extent) the production of these groups of goods is located in countries with low wages, located at significant distances from the main consumer markets.
Analysts expect prices to rise by 3.7% and 3.9% in Estonia and Latvia, respectively.
At the same time, prices may increase by 1.2% in the USA, and by 1.4% in China.
United States manufacturers are dependent on industrial supplies from China and East Asia, and disruptions and delays in container shipping will stifle production growth.
Examples in numbers:
If container shipping rates rise by 10%, coupled with supply chain disruptions, this would lead to a 1% drop in US industrial production.
A similar situation will lead to a decrease in production in China by only 0.2%.
What to do?
According to UNSTAD forecasts, only an improvement in the quality of services provided in ports would reduce the average world cost of world transportation by 4.1%.
Better trade facilitation measures could reduce costs by 3.7% and improved liner connectivity by 4.4%.
