Supply chain price pressures have healed yet their mark on inflation to endure

Supply chain price pressures have healed yet their mark on inflation to endure

Supply chains across the world are healing up almost as fast as they broke down. That doesn’t mean the pressure they’re exerting on inflation will disappear as quickly.

Take the cost of shipping containers. Spot rates from Asia to the US West Coast increased more than 15-fold during the pandemic and have since returned to pre COVID-19 levels as trade between the world’s two largest economies cools from a frenzied pace.

For the latest headlines, follow our Google News channel online or via the app.But the relief is uneven. Short-term prices for containers from Europe to the US East Coast are still more than double what they were in late-2019, according to data from Freightos Ltd.

What’s more, an estimated 70 percentof goods transported in steel boxes on giant ships do so under long-term contracts — not the spot market — and those deals were renegotiated in 2021 and 2022 at much higher rates. Big retailers and manufacturers may not be seeing enough shipping-rate reductions yet to warrant slashing prices further.

“We need to be cautious about the drop in spot prices for containerized freight,” said Jason Miller, an associate professor of supply-chain management at Michigan State University. “Most freight moves under contract prices