Increase in maritime shipping costs

Subject: Increase in maritime shipping costs

A substantial rise in the cost of maritime freight is pushing shipment costs up, which is in turn affecting trade in goods and the final price of the goods being shipped.

Coupled with the increased costs that producers and consumers now pay every day for fuel, basic necessities and raw materials that are becoming more scarce by the day, this is a dangerous trend and one that will, without fail, cause inflation to shoot up again.

There are no signs of this trend being reversed any time soon, so this negative spiral is likely to weigh down on businesses and families alike for some considerable time yet. Furthermore, this poses a threat to Christmas celebrations, one of the most important times of the year for global trade.

This being so, can the Commission answer the following questions:

1. Does it intend to monitor the level of inflation and assess, together with the bodies concerned, initiatives aimed at averting a steep rise in the price of goods and services?

2. Does it think it should espouse a strategy that aims in the long term to ensure that raw material shortages, such as those currently being experienced, cannot continue indefinitely, thereby undermining recovery from the post-pandemic recession?

3. What instruments will it adopt to support the maritime transport sector, which has been so hard hit by the steep rise in freight costs?

Answer given by Mr Gentiloni on behalf of the European Commission

(18 March 2022)

The reopening of the global economy after the ‘great lockdown’ has been accompanied by transport disruptions and supply shortages. These disruptions have proven quite persistent, notably as new Covid variants have emerged, leading to renewed activity standstills.

By resulting in a scarcity of products and logistic means, the different bottlenecks are inevitably creating an upward pressure on the prices of traded goods, which the Commission is closely monitoring.

However, with the improved control of pandemic, there are now indications that some of the backlogs and shortages in transport capacity (e.g. positions of ships or supply for containers) are progressively easing and are expected to bring on a normalisation of transport time and costs. This should ease the pressure on households and firms.

The importance of raw materials for the EU’s economy is reflected in the EU’s New Industrial Strategy and its update (1) and most relevant actions to secure the supply of raw materials in the middle and long term are emphasised in the EU’s Critical Raw Materials Action Plan (2).

The rise in freight costs has mostly affected shippers and consumers, while some segments of the shipping sector have increased their earnings from the current high margins due to exceptionally strong demand. There are multiple causes for the current disruptions in the global supply chain.

The Commission monitors market developments, facilitating the dialogue between all actors of the supply chain and it is liaising with competition and transport authorities within and outside the EU (3).

Currently, it does not seem that regulation and market intervention could profitably substitute market mechanisms in sorting out imbalances between demand and supply.

⋅1∙ https://ec.europa.eu/info/strategy/priorities-2019-2024/europe-fit-digital-age/european-industrial-strategy_en#relatedlinks

⋅2∙ https://ec.europa.eu/docsroom/documents/42849

⋅3∙ https://ec.europa.eu/commission/presscorner/detail/en/mex_21_4622