How Rising Freight Costs Push Up Manufactured Goods Prices and Influence Inflation

The OECD Economics Department working paper by Elena Rusticelli and Catherine MacLeod delivers an in-depth investigation into how container shipping costs affect import prices and, in turn, consumer inflation. Drawing on analysis from the Organisation for Economic Co-operation and Development (OECD) and incorporating perspectives from the International Monetary Fund (IMF), the United Nations Conference on Trade and Development (UNCTAD), and central bank research, the study places recent developments in the context of historic volatility in global shipping. Container freight rates have swung dramatically since 2019, first spiking during the COVID-19 supply chain crisis, then surging again amid the 2023 Red Sea disruptions, which forced significant rerouting of maritime trade, and later being pushed higher by tariff-driven front-loading of US imports in 2024. By mid-2024, shipping prices were more than double their 2023 averages, peaking only 25% below the record highs of 2021 before moderating and then fluctuating sharply again in 2025.

Why the Study Focuses on Manufactured Goods

A major methodological advance of this research is its decision to strip commodities from the analysis, focusing instead on manufactured goods imports. This avoids distortions that arise when oil and other raw material prices, often influenced by the same macroeconomic shocks as freight rates, mask the specific transmission channel between container shipping costs and goods prices. The authors employ a two-step econometric model using quarterly data from 38 countries between 2011 and 2023. First, they estimate the impact of changes in the Shanghai Containerised Freight Index, a key global benchmark for spot container rates from China’s largest port, on manufactured goods import prices. Second, they calculate how these import price shifts feed into core and headline consumer price inflation, with core inflation excluding volatile food and energy prices. This two-stage process makes it possible to pinpoint the inflationary influence of shipping cost changes without the noise from commodity price volatility.

Quantifying the Pass-Through to Prices

The findings reveal that a 10-percentage-point increase in container shipping inflation raises manufactured goods import price inflation by 0.2 percentage points in G20 economies and 0.1 percentage points in OECD economies in the same quarter. While smaller than earlier OECD estimates, the effect is still significant. The subsequent pass-through to consumer prices is modest but measurable: after one year, the same import price rise increases core inflation by 0.18 percentage points in both G20 and OECD countries, while headline inflation rises by 0.08 points in the G20 and 0.12 points in the OECD. Scenario analysis suggests that a 100% surge in shipping costs sustained for a year, as seen in 2024, would lift manufactured goods import price inflation by around 2.3 points in the G20 and 1.3 points in the OECD, with smaller effects on consumer inflation. The study underscores that these magnitudes, though moderate, can meaningfully influence inflation during prolonged periods of high freight costs.

When Bottlenecks and Trade Structures Amplify the Effect

To test the robustness of their results, the authors examine supply-side constraints and trade structures. Supply chain bottlenecks, measured via the PMI suppliers’ delivery times index, tend to amplify the inflationary effect of higher shipping costs, especially in the G20, by tightening the availability of imported goods. The supply of shipping vessels also matters: when global container ship capacity increases, the pass-through from freight prices to import inflation is reduced, though the effect is not always statistically strong. Trade structure plays a decisive role: economies more reliant on seaborne imports are more exposed to freight cost shocks. For countries where 80% of imports arrive by sea, a 10-point rise in containerised shipping inflation can lift manufactured goods import prices by up to 0.8 percentage points in the G20 and 0.5 points in the OECD. This finding highlights the disproportionate vulnerability of island nations and highly trade-dependent economies to maritime cost surges.

Bulk Shipping, Energy Links, and Policy Implications

The paper also briefly analyses the Baltic Dry Index, which tracks rates for bulk commodities such as coal, iron ore, and grains. It finds a strong positive correlation between bulk shipping costs and imported energy prices, but a weak or even inverse relationship with non-energy commodity prices. This suggests that while bulk freight markets and oil prices move closely together, likely due to oil’s dual role as a traded commodity and shipping fuel, bulk shipping costs are a poor predictor of general commodity import price inflation. The overall conclusion is that pass-through from container shipping costs to consumer prices is smaller than in many earlier studies, including previous OECD research from 2021, largely due to the exclusion of commodities in the current model. This aligns with US-based product-level work by Isaacson and Rubinton, which finds higher pass-through for food and raw materials than for manufactured goods. Nonetheless, the authors stress that these smaller effects should not lead policymakers to dismiss freight costs as a driver of inflation. Sharp spikes in container rates, whether from geopolitical conflict, trade policy changes, or sudden demand surges, can still contribute to meaningful and sustained upward pressure on prices, particularly in economies with high maritime import dependence.

By using the Shanghai Containerised Freight Index, which better reflects spot market dynamics than alternatives like the Harpex Index, the study produces more accurate predictions of manufactured goods import inflation in the post-2020 period. This methodological precision, combined with the deliberate exclusion of commodities, yields a clearer, policy-relevant picture of how global shipping markets influence domestic inflation. For governments and central banks, the message is clear: container shipping costs may not trigger runaway inflation on their own, but they remain an important variable in the complex equation of global price stability. In a world of increasingly frequent and unpredictable trade disruptions, keeping a close watch on freight markets is not just a matter for shipping companies, it is a critical component of economic policy planning.