The United Nations Conference on Trade and Development (UNCTAD) reports that global shipping costs surged in the first half of the year due to disruptions in maritime routes and rising operational expenses.

The high costs, the organization adds, are straining the supply chain and may threaten vulnerable economies, raising concerns over trade sustainability, economic growth, and the global effort to achieve sustainable development goals.

UNCTAD attributes much of the increase in freight rates to rerouted vessels, port congestion, and higher operational costs. The report highlights examples like the Shanghai Containerized Freight Index (SCFI), where congestion reportedly more than doubled compared to late 2023.

"As of 18 October 2024, the SCFI was down 45% from its 2024 high and 60% below its record level during COVID-19," the organization states. "However, it remained 115% above the pre-pandemic average and more than double the 2023 average."

Due to these conditions, the average rate on the SCFI Shanghai–South America route more than doubled to $9,026 per twenty-foot equivalent unit (TEU), marking the highest level since September 2022 from January to July 2024.

"During the same period, the SCFI Shanghai–South Africa route saw its average rate almost triple to $5,426 per TEU (the highest since July 2022), while the SCFI Shanghai–West Africa average rate jumped 137% to $5,563 per TEU (the highest since August 2022)," UNCTAD reports.

Disruptions in key routes through the Red Sea, Suez Canal, and Panama Canal have also significantly increased freight rate volatility.

Factors such as longer shipping distances, increased fuel consumption, and rising insurance premiums have further contributed to these cost pressures.

UNCTAD estimates that climate-induced low water levels in the Panama Canal "contributed 49 percentage points to the overall 45% rise in the Baltic Dry Index between October 2023 and January 2024."

The Red Sea crisis and Suez Canal disruptions contributed 148 percentage points to the cumulative 120% increase in the China Containerized Freight Index from October 2023 to June 2024.

The latest Review of Maritime Transport 2024 estimates that these factors could lead to a 0.6% increase in global consumer prices by 2025 "as shipping costs filter through supply chains." Vulnerable economies are expected to face an even sharper rise of up to 0.9%.

These factors, coupled with rising prices of consumer goods and commodities, could threaten food security and economic stability.

Processed food prices, UNCTAD notes, "are projected to rise by 1.3%, further exacerbating the challenges for these nations."