The bad news in this case comes from the sea, which is a strategic space: up to 80% of the world's goods transit through water. The war has increased the maritime cost and its impact risks prolonging the current inflationary spiral for a year and a half.
The Ukraine effect exists. As mentioned by UNCTAD in The Impact on Trade and Development of the War in Ukraine , there was a sudden uptick in freight rates on ships transiting the Black Sea following the attack. From 10,000 dollars a day (February 18) it reached 170,000 (February 25, the day after the invasion), although then prices stabilized.
After the impact of bottlenecks due to the pandemic in 2020, when fares on some routes from Asia increased tenfold, the military conflict in Ukraine is the umpteenth blow to a sector that is very stressed. According to sources consulted, shipping companies have begun to apply several surcharges on official prices for war, which can range from 500 to 1,500 per container.
Alex Arnó, commercial director and head of Transport at RibéSalat, explains that ships operating in the Sea of Azov or the Black Sea are no longer insurable, because reinsurance companies such as Lloyd's do not assume the risk of ships operating in an area under military attack.
However, "all those shipping companies that transit in nearby areas (for example Romania or Turkey), do have to assume an extra cost in their premiums, which can be between 25 and 30%," he says. If you add to this the surcharge due to the rise in fuel (oil is above $ 100 a barrel with an increase of more than 10% compared to before the war and diesel is at historical highs), the difficulty in finding crew members (14% are Russian or Ukrainian) then, the final increase in freight when adding all the components is much higher and can reach up to 30 or 40% over the official rate required.
"Reinsurers ask to raise premiums by 25% on routes close to the conflict," they say in RibéSalat
"Shipping companies are taking advantage of the situation of uncertainty as a result of the war in Ukraine and have raised rates under that pretext," says Jordi Espin, secretary general of Transpime and director of strategic relations at the European Shippers Council (ESC).
Espin points out that these increases are introduced not only in long-term contracts for events that have occurred, but are also reflected in the spot prices that are traded daily in the markets.
In his opinion, the recharges are covert, because they do not appear in official indices such as the Baltic Index. In addition, they are also appreciable in the rates of those maritime routes that do not transit far from dangerous areas either. This generates a cascading effect, because part of the goods that previously traveled by train through Ukraine now travel by ship, so that the ships are now more loaded than before and make pay for their scarce available space.
In Spain, the situation is even more complicated as a result of the strike of the transporters. For two weeks, neither any container entered nor left the Spanish ports, with the result of an extraordinary accumulation in the unloading platforms. There was even a need to rent spaces to store merchandise. Some shipping companies in recent weeks skipped stops in Spanish ports, aggravating the shortage of some products. In Valencia, some ships had to wait three or four days before they could moor, because there was no possibility of disembarking their products.
What impact can this situation have on inflation? Studies say that shipping costs account for 7.5% of the value of imported goods. It is difficult to quantify, although traders believe that at the economic level "the worst is yet to come", because the chain of transmission on the growth of consumer prices is slower than in the case of a rebound in raw materials, for example.
According to Jordi Espin, "shipping companies take advantage of the situation to raise prices"
A recent study this week by the International Monetary Fund (IMF) has calculated in this regard that "the effects are persistent. They peak after a year and last up to 18 months," the authors note. Thus, according to this model, the inflation that is hitting Europe will last until 2023 due to the delayed effects of increases in maritime transport costs.
The study has shown that in 2021 the impact of bottlenecks on the routes of commercial ships meant in OECD countries a recharge of 1.5% on inflation (which closed at 6.6%, its highest level in 30 years). In theory, the progressive decrease in port congestion after the end of lockdowns, the better distribution of containers and the fact that consumers, in a climate of war, buy fewer superfluous (and imported) goods and focus more on local trade should have cooled international tariffs. But the surcharge applied by shipping companies threatens to prolong the wave of inflation in the coming months.
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