The impact of shipping rate problems on the economy recovery

The upswing in container shipping rates has the potential to impact the global economic recovery, with many smaller countries expected to take the most brutal hit from the escalating prices.

Consumer demand for goods during the COVID19 pandemic has caused significant supply chain bottlenecks, which have impacted container ships significantly.

Most officials continue to expect disruptions throughout 2022. Rebeca Grynspa, the Secretary-General with UNCTAD, states, “The current surge in freight rates will have a profound impact on trade and undermine socioeconomic recovery, especially in developing countries, until maritime shipping operations return to normal.”

The increasing container freight rates could increase the import prices by as much as 11 %, which would push consumer prices up by 1.5 %. The impact on smaller economies is expected to be even more severe.

Port Congestions and Closures in 2022

With the Omnicron variant running rampant, the year has kicked off with even more significant congestion problems. Many projects that they won’t decrease as the months’ pass and may even become more of a headache.

The United Nations Conference on Trade and Development (UNCTAD) encourages everyone in the supply chain to go work together to streamline maritime transport and share information in an effort to make things more efficient. The goal is to ease cost pressures and improve the market disruption potential. Perhaps, with everyone working together with transparency of setting rates, fees, and surcharges, things can somewhat work out.

Even with the best of efforts, most continue to predict that the prices are going to increase throughout 2022. The impact on the global economy will take a toll, with the smaller countries struggling the worst.