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Global shipping has been impacted by unprecedented delays and increases in shipping costs, as ports around the world are unable to fast track the backlog of ships seeking to offload containers amidst lockdowns in certain markets. While there was a steady increase in shipping costs and delays occurred throughout the beginning of the pandemic in 2020, this year has seen certain global shipping routes cost 6 times as much as it did a year prior. While other markets globally are seeking to fully reopen their borders and allow for an easier flow of trade, Africa has been affected by this shipping crisis, with these complications furthering impacting in the continent’s ability to recover after the already numerous pandemic challenges.

The Drewry’s Composite World Container Index was up 283 percent year-on-year at the end of September 2021, with the cost of a container peaking at USD 10,361 for a 40ft equivalent. Compared to 2019, this is a 720 percent increase when the cost of a container was USD 1,262. This index measures freight rates on 8 major routes from the US, Europe and Asia. With most of global trade going through these regions, including onward shipping to Africa, price increases here have impacted global supply chains’ ability to successfully operate. Between 2018 and 2019, the probability of a vessel arriving on time at a port was 74.5 percent. In the first 4 months of 2021, this has dropped to 37%. Covid lockdowns, pent up demand and a backlog of orders have all contributed to this decrease.

China has been Africa’s largest trade partner for over a decade, with many of Africa’s strongest economies having China as its top export destination as well as import origin. Many markets in Africa have steadily grown their capacity for certain product categories; however, the continent is still reliant on the Middle Kingdom to provide key products in sectors such as machinery and electronics and transportation. While Africa only accounts for 3 percent of global trade, it is one of the fastest growing regions in the world. This growth however has been impacted by the global shipping crisis. As a region still fighting through high levels of inequality and poverty, the shipping crisis has caused severe increases in consumer prices. Nigeria, which boasts the highest GDP in Africa, has severe levels of poverty, with citizens spending 56 percent of household income on food. These price pressures on households will further drive increases in poverty and create further challenges for governments seeking to return to pre-pandemic levels of economic growth.

Global shipping prices are expected to increase well into 2022, with further delays expected as global supply chains continue efforts to restore stability. African markets have been beset with challenges from the pandemic, and the sooner global shipping can reach normalcy, the higher the likelihood of economic recovery occurring for the African continent.

“This article is produced by Axis Group International and is published in The Econometer section of ChinAfrica magazine (November 2021), an English and French language monthly publication that provides news, views and analysis on all things China, Africa and China-Africa relations.”

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