The United Nations Conference on Trade and Development (UNCTAD) said the rise in the price of sea freight will soon lead to a 1.5 percent increase in global consumer prices through 2023, with smaller trade-dependent countries likely to suffer the most.
Shipping costs go up Geneva-based UNCTAD said freight rates have more than quadrupled over the past decade, and the current price of shipping a 40-foot TEU from China to the United States is 348 percent higher than the pre-pandemic average.
"If it continues, the current rise in container freight rates will raise import prices for consumers significantly," UNCTAD said Thursday in its annual report.
The United Nations said it sees no end in sight to rising containerized freight rates, which it expects to remain high due to persistent demand, supply-side uncertainty and persistent concerns about port efficiency.
Greater damage to smaller economies higher sea freight rates could hurt consumers more in smaller import-dependent economies, which could see a cumulative increase of 7.5% in consumer prices, according to the report.
“This means that the real income of people living in SIDS will be 7.5% lower,” said Jan Hoffmann, Head of UNCTAD's Commercial Logistics Branch.
Some consumer products destined for North America and Europe from Asia, such as computers, electronics and optical products, may see higher prices than others, according to the report. Consumers may also witness a 10% increase in the prices of imported low-value-added goods such as furniture, textiles, clothing and leather goods.
Much of the recent demand for imported goods has been driven by home-grown American consumers who have spent their stimulus money on items such as bicycles and home improvement products, the United Nations said.
Investing in vaccination efforts the United Nations has said that the most important thing governments can do to ease the current shipping crisis is to invest in vaccination efforts globally to speed up the eradication of the epidemic and spur a large-scale economic recovery.
The report presented specific policy proposals to improve the shipping environment, such as: improving port infrastructure, focusing on production efficiency, addressing trade imbalances, improving trade facilitation, and increasing the connectivity of shipping lines.
The United Nations estimates that major structural improvements to the shipping sector could reduce transportation costs by about 4% and mitigate the effects of future disruptions.
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