The supply chain is «hostage» to high fares

Photo by Alex Duffy on Unsplash
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A very interesting report was published by the “UNCTAD – United Nations Conference on Trade and Development”, which gives a lot of information on the world trade. Entitled “Overview of Maritime Transport 2021”, the report points out that nothing will be the same as before in maritime transport, due to the catastrophic impact of Covid-19 on world trade.

The report:

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-stresses that the impact is not so much on the volume of transport, but on the damage it has caused to the supply chain of all countries, indicating that the recovery of the world economy is threatened by high fares in maritime transport. This will result in price increases for consumer goods, and may lead to changes in production models from major importing countries.

-confirms and states that maritime trade shrank 3.8% in 2020, despite the initial shock, but recovered later in the year and is expected to increase by 4.3% in 2021. The average outlook for maritime trade remains positive, but is subject to “increasing risks and uncertainties”.

-explains that American and European manufacturers will pay the heaviest bill, mainly those based on industrial supplies from China and other eastern economies, and points out that “the result will be constant cost pressures, interruptions and delays in container shipments that will create production problems “.

-finally predicts that a 10% increase in shipping container fares, combined with the supply chain shutdown, will reduce industrial production in the US and the euro area by more than 1%, while in China production may fall 0,2%.

A useful conclusion to all of this was that the pandemic highlighted the challenges facing the maritime transport sector, in particular the shortage of human resources and the lack of infrastructure.