{ "title": "How Soaring Shipping Costs Raise Prices Around the World", "publication": "IMF Blog, March 28, 2022", "sourceUrl": "https://www.imf.org/en/blogs/articles/2022/03/28/how-soaring-shipping-costs-raise-prices-around-the-world", "canonical": "https://www.imf.org/en/blogs/articles/2022/03/28/how-soaring-shipping-costs-raise-prices-around-the-world", "overlayPath": "/en/blogs/articles/2022/03/28/how-soaring-shipping-costs-raise-prices-around-the-world/index.md", "summary": "The sea carries more than 80 percent of the world’s traded goods, most transported in 40-foot-long steel containers.", "sections": [ { "heading": "Key findings and magnitudes", "content": "- The sea carries more than 80 percent of the world’s traded goods, most transported in 40-foot-long steel containers.\n- In the 18 months following March 2020, the cost of shipping a container on the world’s transoceanic trade routes increased seven-fold, while the cost of shipping bulk commodities spiked even more.\n- Using data from 143 countries over the past 30 years, the analysis finds:\n - When freight rates double, inflation picks up by about 0.7 percentage point.\n - The effects are persistent, peaking after a year and lasting up to 18 months.\n - The increase in shipping costs observed in 2021 could increase inflation by about 1.5 percentage points in 2022." }, { "heading": "Transmission mechanisms and timing", "content": "- Pass-through to import and producer prices:\n - Higher shipping costs hit prices of imported goods at the dock within two months.\n - These higher import costs quickly pass through to producer prices, reflecting reliance on imported inputs.\n- Pass-through to consumer prices:\n - The impact on consumer prices builds more gradually and hits its peak after 12 months.\n - This slower pass-through to consumers contrasts with global oil-price shocks, which drivers feel at the pump within a couple of months.\n- Volatility and contribution to inflation variation:\n - While the pass-through to inflation from shipping costs is less than that from fuel or food prices (which account for a larger share of consumer purchases), shipping costs are much more volatile.\n - Consequently, the contribution in the variation of inflation due to global shipping price changes is quantitatively similar to the variation generated by shocks to global oil and food prices." }, { "heading": "Cross-country heterogeneity", "content": "- Structural and exposure factors that amplify inflationary effects:\n - Countries that import more of what they consume see larger increases in inflation.\n - Countries more integrated into global supply chains experience larger inflation effects.\n - Countries that typically pay higher freight costs (landlocked countries, low-income countries, and especially island states) see more inflation when shipping costs rise.\n- Policy framework interaction:\n - A strong and credible monetary policy framework can mitigate second-round effects from import prices and inflation.\n - Keeping inflation expectations well-anchored is key to containing the effect of soaring shipping costs on consumer prices, particularly core measures that exclude fuel and food." }, { "heading": "Outlook and policy implications", "content": "- The analysis suggests the inflationary impact of shipping costs will continue to build through the end of 2022.\n- Central bankers face complicated trade-offs: increasing inflation pressures from higher shipping costs amid still ample slack in economic activity.\n- The war in Ukraine (noted as occurring after this analysis was prepared) is likely to cause further supply-chain disruptions, which could keep global shipping costs—and their inflationary effects—higher for longer.\n\nSource: IMF Blog — How Soaring Shipping Costs Raise Prices Around the World (March 28, 2022)\n\n---\n\n\n References\n\n- Our new research shows\n- https://www.imf.org/wp-content/uploads/2022/03/COTW-shipping-costs.jpg\n\nSource: https://www.imf.org/en/blogs/articles/2022/03/28/how-soaring-shipping-costs-raise-prices-around-the-world" } ], "bullets": [ "[Markdown version](/en/blogs/articles/2022/03/28/how-soaring-shipping-costs-raise-prices-around-the-world/index.md)", "[Structured JSON version](/en/blogs/articles/2022/03/28/how-soaring-shipping-costs-raise-prices-around-the-world/index.json)", "[Bundle manifest](/en/blogs/articles/2022/03/28/how-soaring-shipping-costs-raise-prices-around-the-world/bundle-manifest.json)", "Authors: Yan Carrire-Swallow, Pragyan Deb, Davide Furceri, Daniel Jimenez, Jonathan D Ostry", "Published: March 28, 2022", "The sea carries more than 80 percent of the world’s traded goods, most transported in 40-foot-long steel containers.", "In the 18 months following March 2020, the cost of shipping a container on the world’s transoceanic trade routes increased seven-fold, while the cost of shipping bulk commodities spiked even more.", "Using data from 143 countries over the past 30 years, the analysis finds:", "Pass-through to import and producer prices:", "Pass-through to consumer prices:", "Volatility and contribution to inflation variation:", "Structural and exposure factors that amplify inflationary effects:", "Policy framework interaction:", "The analysis suggests the inflationary impact of shipping costs will continue to build through the end of 2022.", "Central bankers face complicated trade-offs: increasing inflation pressures from higher shipping costs amid still ample slack in economic activity.", "The war in Ukraine (noted as occurring after this analysis was prepared) is likely to cause further supply-chain disruptions, which could keep global shipping costs—and their inflationary effects—higher for longer.", "[Our new research shows](https://www.imf.org/en/Publications/WP/Issues/2022/03/25/Shipping-Costs-and-Inflation-515144)", "[https://www.imf.org/wp-content/uploads/2022/03/COTW-shipping-costs.jpg](https://www.imf.org/wp-content/uploads/2022/03/COTW-shipping-costs.jpg)" ], "alternates": { "markdown": "/en/blogs/articles/2022/03/28/how-soaring-shipping-costs-raise-prices-around-the-world/index.md", "json": "/en/blogs/articles/2022/03/28/how-soaring-shipping-costs-raise-prices-around-the-world/index.json", "bundleManifest": "/en/blogs/articles/2022/03/28/how-soaring-shipping-costs-raise-prices-around-the-world/bundle-manifest.json" }, "generatedAtUtc": "2026-08-27T02:22:15.112Z" }