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What is driving the recent surge in shipping costs?
In the second half of 2020 global economic activity and trade staged a sharp rebound driven mainly by the manufacturing sector, while services sector activity was and has remained subdued. In the third quarter of 2020 global economic activity recovered swiftly as a result of the easing of the pandemic and associated containment measures as well as the significant policy support deployed at the peak of the crisis. Despite a slowdown in the last quarter of the year, reflecting a worsening of the pandemic, the pace of the global economic recovery in the second half of 2020 was overall stronger than initially estimated (ECB 2021, IMF 2021).[1] It was driven to a significant extent by the manufacturing sector (Chart A, upper panel), as production activities restarted and the demand for goods recovered. At the same time the services sector, and especially the most contact-intensive activities, lagged behind owing to continued social dist
Global PMI Indices (diffusion indices)
(y-axis – PMI suppliers’ delivery times (reversed); x-axis – PMI new export orders, change between February 2021 and Q2 2020)
Sources: IHS Markit, Haver analytics and ECB staff calculations.
Notes: The size of the bubbles is proportional to the change in the PMI index for input prices between February 2021 and Q2 2020. Grey dots reflect increases in the PMI index for input prices below 10, yellow dots reflect increases between 10 and 15 and blue dots reflect increases in the PMI index greater than 15.
Rising ocean freight shipping costs are another sign of supply bottlenecks (Chart C, upper panel). Since the second half of 2020, global freight shipping costs have been on a steady recovery path from the lows reached in the midst of the pandemic. In recent months, however, they have reached levels not seen since after the Great Financial Crisis, while growth rates have risen above those observed since 2015. At the same time, transport c