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HOW SHIPPING DISRUPTION AFFECTS YOU
If you live in the UK and have ordered a new sofa from a manufacturer in China, you could expect a delay of at least 10 days. The prices of certain products could also rise if freight levels increase significantly. An International Monetary Fund forecast shows a doubling of shipping costs could increase consumer price inflation by 0.7 per cent.
However, sea freight activity generally has a marginal impact on most consumer prices – it only makes up 0.35 per cent of prices for some types of clothing, for example.
On the other hand, oil prices could spike if more energy companies follow BP and stop using Suez Canal, especially if this disruption persists over time. The price of Brent Crude – a global benchmark for oil – has already risen from US$73 on Dec 12 to about US$78 on Dec 18.
Although you might not have to pay more for the products you buy, there is another cost of this situation, for people and the planet: Increased carbon emissions. More than 3,000 extra nautical miles (5,556km) will be taken by vessels using the Cape route, which could generate around 30 per cent to 35 per cent more carbon emissions than if these ships were sailing the Suez route. The shipping industry already creates 3 per cent of global emissions.
Shipowners will be forced to keep diverting ships from the Red Sea if attacks on vessels continue. Of course, it remains to be seen when and how this problem will be solved. Until it is, uncertainty and change could continue to affect your pocket – and the planet.
Gokcay Balci is Assistant Professor in Logistics and Supply Chain at the University of Bradford. This commentary first appeared on The Conversation.
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