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00:00A really fantastic piece one thing that stood out to me. You quote here a vegetable processor based in rural India who says they exploit our desperation. This continues to be an issue. Why is this a sky high ocean ship. Shipping rates. Why is that not going away. Well it's basically a factor of supply and demand. You have very strong demand still in the US for for imported goods. And on the supply side there's a finite number of ships and containers 2 to two for those to compete for. So basically what you have is a lot of strain on capacity. You add on top of that lockdowns in China port congestion is on the U.S. on the U.S. West Coast. And you're just and you're just looking at a supply demand scenario that's just stretched about as thin as it can go. Ben good to have you with us this morning. Look when you raise prices as darned hard for them to come back down they don't come back on as quickly as the vintages line on the way out. So the question is after this ramp up in prices in shipping how much will it endure on the global inflation. How long will it last. How long will it stick. Well the longer the longer this goes on the deeper embedded these these higher rates get embedded into the economy. You have a spot market for ocean freight and you have a contract market for ocean freight. The spot market is very volatile. It's the one that has you know gone over twenty thousand dollars for a 40 foot container. The contract rates are the other rates that are negotiated between the carriers and the customers of those services. And those are as we report today. Those are also sky high as much as 200 percent higher than they were a year ago. So the economists that we talked to and one of them works for the Kansas City Fed says that look these are getting these are getting locked into longer term periods. And that just means if you're a company paying those rates there's only so much you can take until you pass that along to consumers. And it bleeds through to inflation to regulators to anything at this point. Well it's interesting. The U.S. and the European Union monitor the container carriers to make sure that there aren't any sort of anti trust rules that are broken. And they haven't found any to it at this stage but they're continuing to monitor it. But a lot of critics would say that they don't really have the tools to come down hard on the carriers if they do find that there's some behavior that's anti-competitive going on.

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Record Profits for Shipping Industry

It’s been a record year of profits for the shipping industry and earnings are expected to stay elevated well into 2022. But, economists are warning that persistently high prices for transportation and logistics globally are stoking inflation and clouding the recovery. Bloomberg’s Brendan Murray reports on “Bloomberg Daybreak: Europe.” (Source: Bloomberg)

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