Bank of England governor Andrew Bailey looks increasingly uncomfortable as inflation notches upwards from ‘nothing to worry about’ towards the Bank’s latest prediction of a decade-high 4 per cent peak later this year and a possible ‘Oops, we’re back to the 1970s’ if spiralling wage and price pressures confound the forecasters. I wrote last week about the UK’s lack of lorry drivers, but that’s just one of many bottlenecks that need unblocking, as Bailey says, to bring ‘a wave of supply back on to the market’ and quell the blip. More significant globally, and much more difficult to resolve, is the logjam of shipping.
The composite World Container Index published by the maritime research firm Drewry stood this week at $9,371 per 40ft container, which is 370 per cent higher than in the same week last year, having risen steeply since the grounding of the giant carrier Ever Given in the Suez Canal in March. On all major routes, particularly from China to the West, rates are soaring — reflecting shortages of containers where they’re most needed in the east, and of ships to carry them. A record number of new vessels are on order — 229 at the last count, capable of carrying more than two million standard containers. But most won’t be in service until 2023 and can’t make much difference until ‘landside’ port congestion is also relieved. In simple arithmetic, a normal six-week round-trip container-ship voyage currently takes at least seven weeks because port services are so slow, which means seven vessels are needed instead of six to maintain the same rate of goods delivery.
Pressure may tail off as the post-lockdown surge in consumer spending subsides — but mount again later in the year. Never mind the global shortage of microchips, for which freight costs per miniaturised item are negligible.