World economies battle inflation and no actions are taken to contain shipping chaos
Though no authorities took actions to curb oil prices, some entities banded together to tame the out-of-control prices by reducing production. Can the same be done for shipping?
Rising costs a concern
Big carriers are “blacklisted” for their price gouging. The excuses justifying this callous way to profit are COVID-19 and port congestions – reflecting zero remorse on holding shippers hostage with high prices. The impact trickles down to the retailers who have also raised prices.
Singapore recorded inclined consumer prices as at 23 June 2021, driven mainly by higher services inflation and a smaller decline in the cost of retail and other goods. Data from the Monetary Authority of Singapore (MAS) and Ministry of Trade and Industry (MTI) revealed core inflation increased to 0.8 per cent year-on-year in May, up from the April 0.6 per cent.
MAS and MTI said external inflation has risen amid the recovery in global oil prices and “turnaround in producer price inflation in the major economies. While there are upside risks, the upward pressure on global inflation should ease in later 2021. Surplus oil production capacity should cap the extent of oil price hikes, while continued negative output gaps in some of Singapore’s major trading partners should moderate import price pressures,” they added.
Mitigating pressures of high prices
Recent Baltic Freight Indexes revealed a blatant shift in shippers’ preferences. It revealed shippers are more than ready to sustain their own businesses even if it means cutting themselves loose from partners whom they have collaborated with for years.
Analysts are right to project both the pandemic and high shipping rates will stay for some time. It however does not translate to perpetual heightened costs. Shippers have the opportunity to “tame” inflation on their own terms. By chartering smaller vessels for the same purposes through Marine Online, they not only manage to get their goods shipped on time, shippers can also enjoy cost savings and zero disruptions.
Marine Online News Team
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