• Analysis and Studies
• Freight Rates Rise

UNCTAD’s analysis shows that the current surge in container freight rates, if sustained, could increase global import price levels by 11% and consumer price levels by 1.5% between now and 2023.

What are the causes of such an increase in freight costs?

Covid-19 pandemic brought a general increase in the demand for goods, above all in the second half of 2020 and into 2021. Also, working from home, online shopping and increased computers sales all placed unprecedented demand on supply chains.

At the same time, shortages of capacities, containers and labour to face the covid-19 pandemic and ports’ new rules reduced the supply capacity.

These two phenomenon together reduced supply capacity and increased container freight rates on practically all container trade routes.

Some industries will suffer this trend more than others

UNCTAD predicts consumer price increases of 10.2% on low-value-added items such as furniture, textiles, clothing and leather products.

The analysis further predicts a 9.4% increase in rubber and plastic products, a 7.5% increase for pharmaceutical products and electrical equipment, 6.9% for motor vehicles and 6.4% for machinery and equipment. 

How to address the problem?

UNCTAD invites countries to consider a portfolio of measures that span hard and soft infrastructure and services. Improving the quality of port infrastructure would lower transport costs; better trade facilitation measures as well as working on a better liner shipping connectivity would have the same goal.

Source: https://unctad.org/press-material/high-freight-rates-cast-shadow-over-economic-recovery