Madam Selina Atoklo, a field clerk at the Rister Freight and Logistics limited, has disclosed that the soaring shipping costs has raised prices globally which would make Ghanaian importers suffer.
Speaking to Vaultz news, Madam Selina Atoklo, said, goods clearing has sharply gone up and can be seen in their market prices.
“Clients keep complaining about the changing cost of clearing their goods; this is becoming worrisome. I only cry for the importers and the final consumer of these products because when importers pay higher duties and higher shipping lines, they push the burden to the consumers to bear, and they suffer a lot. Shipping cost has not only gone up because of the Russia-Ukraine war; there are other factors like the covid-19, which raised freight charges last year. The only way Ghana can be safeguarded is to consider cutting down on importation.”
Madam Selina Atoklo
She added that a report by the International Monetary Fund (IMF) confirms this rise in shipping costs. According to the report, the result of these challenges is that the cost of shipping a container on the world’s transoceanic trade routes increased seven-fold in the 18 months following March 2020, while the price of shipping bulk commodities spiked even more. According to the research, the inflationary impact of those higher costs is poised to keep building through the end of this year.
“Our analysis predates the war in Ukraine but isn’t isolated from it: the conflict will likely exacerbate global inflation. The sea carries more than 80 percent of the world’s traded goods, most of which sail inside 40-foot-long steel containers stacked by the thousands atop some of the largest vessels ever built. The shock of the pandemic underscored just how crucial the maritime container trade is to the global economy. From Shanghai to Rotterdam to Los Angeles, the coronavirus upended supply chains. Ports lacked homesick workers. Truck drivers and ship crews couldn’t cross borders because of public health restrictions. Pent-up demand from massive stimulus programs during extended lockdowns overwhelmed the capacity of supply chains. Besides causing delays in getting goods to customers, the cost of getting them there surged. Studying data from 143 countries over the past 30 years, we find that shipping costs are an essential driver of inflation worldwide: when freight rates double, inflation picks up by about 0.7 percentage points. Most importantly, the effects are persistent, peaking after a year and lasting 18 months. This implies that the increase in shipping costs observed in 2021 could increase inflation by about 1.5 percentage points in 2022.”
IMF report
Shipping costs are much more volatile. As a result, the contribution in the variation of inflation due to global shipping price changes is quantitatively similar to the variation generated by shocks to the global oil and food prices.
Rising shipping costs affect inflation in some countries more than in others
Countries that import are more likely to suffer
The report has revealed that higher shipping costs hit prices of imported goods at the dock within two months and quickly pass through to producer prices, many of whom rely on imported inputs to manufacture their goods.
But the impact on the prices consumers pay at the cash register builds up more gradually, hitting its peak after 12 months. This is a much slower process than what is seen after a rise in global oil prices, which drivers feel at the pump within a couple of months.
“Rising shipping costs affect inflation in some countries more than in others. Thus, the structural characteristics of an economy matter. Countries that import more of what they consume see more significant increases in inflation than those more integrated into global supply chains. Similarly, countries that typically pay higher freight costs, landlocked countries, low-income countries, and especially island states, see more inflation when this rises. A solid and credible monetary policy framework can mitigate the second-round effects of import prices and inflation. Our analysis shows that keeping inflation expectations well-anchored is key to soaring shipping costs on consumer prices, particularly core measures that exclude fuel and food. Our results suggest that the inflationary impact of shipping costs will continue to build through the end of 2022. This will create complicated trade-offs for many central bankers facing increasing inflation and still ample slack in economic activity. Moreover, the war in Ukraine is likely to cause further disruptions to supply chains, which could keep global shipping costs, and their inflationary effects higher for longer.”
IMF report
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