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COVID-induced inflations projected to continue in 2022

World economies to brace themselves for persistent inflation this year

A report by digital supply chain expert project44 noted average delays on shipping from China to Europe rose to 6 days in December, after falling for months. Delays on routes from China to the west coast of the United States have also been increasing steadily since October.

A string of challenges
The report alerted, “Delays are likely to continue well into 2022 as COVID breakouts continue throughout supply chains and consumers continue to buy at a healthy rate.” It added the pandemic has a continual impact on global trade given shipping rates skyrocketed, and congestions plus delays have become a norm. Josh Brazil, project44’s Vice President of supply chain data insights remarked, “Blank sailings will continue well into 2022, as ports work on backlogs and consumer spending remains strong.” Brazil related this to the prevailing imbalance of empty cargo vessels at the wrong locations.

Lloyd’s List Intelligence’s findings revealed there were 82 cargo ships off the ports of Shanghai and Ningbo in China, waiting to load. Further south, near Yantian and Hong Kong, another 61 ships dwelled. On the other side of the Pacific, outside the ports of Long Beach and Los Angeles, 68 ships were waiting to unload, while 19 ships were waiting off Rotterdam and Antwerp. Some ports were reportedly compelled to work round the clock to keep up.

Another aggravating cause is China’s zero-COVID policy despite its good intentions, only adds on to the delays over the Lunar New Year. Michelle Wiese Bockmann, Markets Editor at Lloyd’s List pointed out, “Most of the delays and queues in China are a result of land-based restrictions imposed by port authorities at key exporting ports. The policy has led to a roster system for port workers, with only half working at any one time and confined to the port, while the others are off.”

All could agree the only happy folks are the shipping lines, profiting from spot rates and space competition. Maritime research consultant, Drewy noted the cost of sending one cargo from Asia to Europe or the United States has sky-rocketed, and estimated the shipping industry made record combined profits of US$190 billion in 2021. It added this record could be broken in 2022, and the knock-on impact is pretty obvious – the soaring cost of shipping goods around the world is fuelling rising inflation for everyone.

Marine Online News Team
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