Markets underestimating risk of rising shipping costs
Jason Starr felt the first flashbacks of pandemic PTSD back in mid-April.
That’s when the vice president of operations at Montreal-based Globe Electric heard something he hadn’t in 18 months: Bookings on cargo ships from Asia were getting tight.
Within weeks, spot container rates surged the most since 2022 and customers were demanding lighting products sooner than ever before the peak sales season in the fourth quarter.
“We better start planning,” he recalled. “The shipping crisis during Covid really helped us understand how to handle future shipping crises like the one we’re in right now.”
The historic disruption of $25 trillion in global goods trade that culminated two years ago left the deep economic scars of inflation and paranoia about shortages. But it also created buffers at companies like Globe Electric: procurement teams now more flexible with a new reliance on technology and data tools to guide their decisions.
So far, merchandise trade is withstanding its first post-pandemic shock, with no noticeable flareup of global consumer prices. But that’s not guaranteed to last if snarls prove long-lasting, or begin to bog down land-based logistics.
“We think markets are underestimating the risk of rising shipping prices,” Nomura economists led by George Moran in London wrote in a research note Wednesday. “Our model suggests there may be notable upward pressure on inflation.”
For central banks around the world that have begun or are preparing reductions to interest rates, any resurgence of consumer-price inflation would pose a major challenge. What could help policymakers is the maritime industry’s stepped-up efforts to address imbalances.
“One thing I’ve learned over the last couple of years is almost don’t expect
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