Inflation and Shipping Costs

Abstract

has increased substantially. Along with price increases, disruptions and high volumes at ports have led to ships sitting idle and delays in unloading cargo.1 In a January 2022 tour of the Port of Long Beach, Transportation Secretary Pete Buttigieg discussed the influence of these disruptions on inflation, stating, “There’s no question that when you have a scarcity of access to shipping, you’re going to see upward pressure on prices, and that’s going to be part of our challenge when it comes to inflation.”2 Maritime shipping represents a key piece of the U.S. supply chain, as well as a major way goods reach the United States; 57% of the total value of the average imported good arrives by sea.3 The spike in maritime freight prices aligns with the large spike in import prices, pointing toward increased maritime freight costs as a potential explanation for recent import price inflation. In this essay, we examine the claim that the increase in shipping prices has been a factor in the recent rise in inflation. In particular, we look at whether the price of imports has increased more for products that tend to be imported by sea or for those imported by other methods, such as air or rail.