STUDIES & Macro Notes

Supply Chain Dirsuptions

1. Skyrocketing container freight prices

  • As seen in the graph above, the average price to ship a container went from $1,279 back in September 2019 to $10,839 in September 2021, a relative increase of 7.5 times in 24 months
  • Nevertheless, there is great heterogeneity: the price from China to the U.S. West Coast is 13 times its pre-Covid levels, while for the reverse route is only 2 times its pre-Covid level2
    • Thus, some carriers are willing to return to China with empty containers instead of waiting around for U.S. exports to (slowly) reach the ports. Same happens in Europe and Latam
    • The issue should normalize no earlier than in 9-12 months. Meanwhile, the imbalance is impacting container circulation and the flow of trade, causing higher costs and delays

    2. What happened?

    3. Macroeconomic consequences

    Commodity prices and shipping costs are causing inflation worldwide, while supply chain disruptions are slowing down the global economic recovery

    • A sooner-than-expected rebound in global demand, together with supply chain disruptions and reduced inventories have pushed commodity prices and transportation costs higher
    • According to an OECD report1, these higher prices account for ~2/3 of the increase in inflation observed during the past 12 months in G20 economies: 1.5 pp of annual inflation
      • The effect on inflation is expected to peak in Q4’21 at 1.6pp to then decrease slowly until reaching zero by mid-2023. The expected effect on 2022 inflation is ~0.9 to 1.2 pp
      • Shipping costs will rise further by ~25% in 4Q’21, continue rising until stabilizing in 1H’22
    • Nevertheless, supply chain issues also have a real effect on GDP: according to an April 2021 Goldman Sachs note, chip/semiconductor shortage could shave 1.0pp of U.S. GDP in 2021
      • Semiconductors make 0.3% of U.S. GDP; the components they go into make up ~12%
      • For Mexico, they represent ~0.0% of GDP, but they go into ~65% of its exports

    Policy makers argue that this issue is temporary and short-termed; in reality, it is proving to be more persistent and thus may be solved only in the medium-term (~2-3 years)

    1. Source: Freightos, October 2021 (
    2. Source: Forbes “No End In Sight For The COVID-Led Global Supply Chain Disruption” (September 3, 2021).
    3. Sources: Forbes, Bloomberg and The New York Times
    4. Source: “Keeping the Recovery On Track”, Interim Report September 2021, OECD.

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