The global shipping crisis seems to continue until 2023

90% of the world's goods are transported by sea, which has the risk of exacerbating global inflation, which has proved to be more difficult than expected.
Peter sand, chief analyst of xeneta, a freight rate benchmark platform, does not expect container transportation costs to normalize before 2023.
"This means that the rise in logistics costs is not a temporary phenomenon," sander said. "For inflation, this means trouble... The factors of the shipping industry, although they may be small, are larger than ever in the overall price, which may be a permanent boost to future prices."
After the six-day blockade of the Suez Canal in March caused a global backlog, maritime transport costs began to soar. Due to the uncertainty of future fuel and emission regulation, new ship orders hit a record low, which tightened the already tight ship leasing market.
Then, during the coronavirus blockade, consumer demand for commodities surged, and shipyards were struggling with COVID-19 related labor shortages.
Berenberg analysts estimate that in early November, 11% of the world's container load was blocked by traffic, lower than the peak in August, but much higher than the 7% before the pandemic.
Backlog until 2023
RBC Capital Markets estimates that in late October, in Los Angeles / Long Beach, one of the world's largest container ports, ships turned around twice as long as before the pandemic.
Although the worst may have passed, RBC analyst Michael tran believes that freight prices will not return to pre pandemic levels in the next few years.
He said that even if the plan to unload an additional 3500 containers a week is implemented, the backlog in Los Angeles / Long Beach is unlikely to be cleared by 2023.
"The price weakness we saw at the end of September is a false dawn. From the perspective of big data, the situation has not improved."
A UN report last month said that high freight rates threaten the global economic recovery, indicating that from now to 2023, high freight rates may increase global import prices by 11% and consumer prices by 1.5%. Read more
This effect will also produce ripples; A 10% increase in container freight rates will reduce industrial production in the United States and Europe by more than 1%.
"Not worth it"
The report points out that the price of cheap goods will rise more proportionally than expensive goods, and the competitiveness of poor countries producing low value-added goods such as furniture and textiles will be hit the most.
Ben may, head of macro research at the Oxford School of economics, said that the retail price of low-end refrigerators would rise by 24%, while the retail price of more expensive brands would rise by 6.5%. "The company may stop shipping very cheap refrigerators because it's not worth it," he added
With the reopening of the economy, people can spend on travel and dining out instead of clothes or appliances, and the prosperity of the shipping industry is expected to weaken.
However, this theory is being challenged by new coronavirus variants and the large amount of epidemic time saved by consumers who can buy more goods through channels.
In the last earnings season, companies such as toy manufacturer Hasbro, retailer dollar tree and consumer goods giant Nestle lamented the weak rise in freight costs and prices.
As the inventory sales ratio in the United States approaches an all-time low, enterprises also need to replenish inventory.
James Gellert, CEO of rapidratings, an analysis company, said that if smaller companies are unable to meet their business obligations and are difficult to sustain, the problem may get worse:
"These time bombs are all over the supply chain of large enterprises and will bring many problems to customers who depend on their goods and services."
True liberation will come only when more ships appear.