High Shipping Rates and Inflation Continue to Impact the Supply Chain

May 20, 2022

Carrier Contract and Spot Rates

Both contract and spot rates continue to be high as U.S. importers are strained under a tight supply chain with shipping contracts being raised to record highs. Now, shippers are straining over negotiations that may not realize or guarantee timely arrival of their ordered shipments. According to Bloomberg, in a March 2022 article, shipping of merchandise from place-to-place costs about 11 times more now than before the COVID-19 pandemic outbreak. Currently, rates are not suspected to return to the prices paid prior to the pandemic since carriers suffered from overcapacity and low profits for years.

United States April 2022 Inflation Rate

In April 2022, the 12-month inflation rate in the US was 8.3%, which is slightly down from the March 2022 rate of 8.5%. When inflation increases, usually the price of goods and services in an economy rises and results in the buying of fewer goods and services, which can result in a reduction in purchasing power.

Inflation and the Retail Industry

The National Retail Federation (NRF), the world’s largest retail trade association, indicates inflation continues to be the highest rate in decades.  According to the NRF May 2022 survey of shoppers, both consumers and businesses are feeling the pain of higher prices on everything from everyday goods, services, rent, groceries, and gas.

The NRF continues to advocate for the removal of the harmful China 301 tariffs as it would help alleviate some of the inflationary pressure on the U.S. economy. CEO, Matthew Shay, wrote to President Biden indicating in part, “We have noted the administration’s recent policy recommendations regarding inflation, and we respectfully observe that one of the most effective and meaningful tools, would be tariff relief, however, it has not yet been put forward. This is a missed opportunity.”

Please contact your Western Overseas representative with any questions.