Inflation and Shipping in 2022
Since the dawn of the Covid-19 pandemic, shipping of all kinds has increased. As can be evidenced by Amazon’s meteoric rise in stock since the first lockdown, people have been ordering more things online, with physical stores becoming less attractive to consumers.
But this increase in the physical rate of shipping has also caused average shipping costs to increase, as there has been a higher demand for products in a time when labor shortages are occurring left, right, and center. This in itself could be a dangerous contributor to global inflation.
Shipping Container Cost
Before the pandemic, the average price of a 40ft shipping container was around $1,300, but since lockdowns hit, that price has risen as high as $11,000 a unit. While that cost has since decreased somewhat, the rate is still yoyoing around the record high numbers.
This aspect of costs increasing so much will influence a faster rate of inflation, as businesses are having to raise the prices of their products in order to keep up with the added cost of transport.
International Freight Shipping Rates: Backlogs
At points in the pandemic, ships leaving from certain high-traffic ports have taken up to twice as long to return from journeys, which along with other issues has caused a backlog of goods all over the world. The 6-day blockage of the Suez Canal was another event that added to the global backlogging of delivered goods.
It’s also worth noting that during the pandemic, orders for new ships to be built hit record lows, with some attributing this to a wider global interest in increasing fuel and emissions regulation. Since then, orders have shot back up, but with ships taking three years to produce and deliver, it will be some time before increases in fleet contribute to a recovery.
The Effects of Inflation on You (and What You Can Do)
According to a United Nations Report, high freight rates could increase global import prices by 11%, in turn increasing consumer prices by 1.5% overall. This means that the increase in shipping costs could essentially make goods more expensive all over the world.
Certain companies, especially those shipping cheaper goods, are having to massively increase the prices of their products to make shipping worthwhile, with some removing shipping options for lower-value items altogether.
Inflation affects all of us, and while there are plenty of people working towards recovery, it may be some time before costs return closer to normal.
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