Shipping Prices Continue to Rise​

By Jake Rickman​

What do you need to know this week?

The ocean tides may rise and fall, but global logistics analysts do not expect the cost of shipping to ebb in 2022.

When the world entered lockdown at the start of the pandemic, carriers cut voyages, ports cut employees, and shipbuilding slowed because of slackening demand for goods. But as we have emerged from lockdown and demand has picked back up, the transportation industry is struggling to catch up. As a result, prices are on the rise.

Compared to pre-pandemic levels, carriers are now charging as much as 10 times more to move goods around the world.

This could have a sustained impact on the price of goods, which economists have already identified as a key driver of inflation.

These increased costs may be here to stay for the foreseeable future, given the shipping industry is facing the twin pressures of “decarbonisation and digitisation”, which may result in permanent price increases as the industry consolidates through mergers in an effort to modernise.

Why is this important for your interviews?

A healthy economy requires a healthy supply chain, which ideally refers to an unbroken connection of goods moving hands until they reach the end consumer.

At the beginning of the supply chain, companies extract raw materials from the ground and ship them to refineries and manufacturers to create products like silicon computer chips. These are sold to other manufacturers who create computers, cars, and other products. These goods are then sold onto retailers until it reaches the consumer, who purchases the product for their own use.

Given that the global shipping industry moves 80% of the world’s goods by volume, where there are traffic jams around the world’s ports, there is a problem.

These newest alerts, while sobering, offer you an opportunity to explain to interviewers what happens when the global supply chain is broken. It also connects to the larger theme of inflation, which remains as topical in 2022 than ever.

How is this topic relevant to law firms?

Aside from the way in which shipping costs impact inflation, and the effect inflation has on corporates and restructuring legal practices, this allows us to shed some light on industry practice areas like shipping law.

Shipping law firms like HFW advise key stakeholders in the shipping industry on a variety of issues. For instance, where there is a dispute arising over the carriage of goods, such as between a “charterparty” (a company that hires a ship) and the shipper, shipping lawyers will advise the parties on a resolution. Given the breakdown in the supply chain, it is easy to see how such disputes can come about.

On the transactional side, shipping lawyers are also involved, helping shipowners and shipbuilders navigate financing in the context of decarbonisation pressures.


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