Influence of inflation on international transport - Euro24

Influence of inflation on international transport

For many entrepreneurs, operating in such a high inflation as it is today is something completely new. Historically, its highest level in the consumer edition (based on data provided by the Central Statistical Office) occurred at the turn of 1989-1990, i.e. shortly after the fall of communism. Probably some of you remember that our country (Poland) that time faced hyperinflation reaching 1000% year on year. The last time we recorded a double-digit level of inflation in several months of 2000. There are absolutely understandable concerns of entrepreneurs about their own businesses and the future of their companies. What is the impact of inflation on the shipping industry?

Was Covid 19 a trigger for a recession?

„Hard times make strong people, strong people make good times, good times make weak people, and weak people make hard times.” This quote by G. Michael Hopf seems to perfectly reflect the current economic situation. After years of relative prosperity, and more importantly stabilization, we had to face difficulties for which we were not ready. The pandemic from two years ago, the collapse of the economy, the war in Ukraine, the cycle of environmental disasters in Asia and America have an extremely strong impact on the global industry. The transportation industry will be no exception to these uncertain times. The inhibition of the production of luxury goods, as well as non-necessity goods, will lead to the collapse of many transport companies. Interestingly, the carrier industry performed fairly well compared to other sectors during the most difficult months of the pandemic. More than one international carrier confirms that hard times in the transport industry are throughout Europe and around the world. The boom on the e-commerce market has ensured that many carriers have a relatively safe transition through the initial stages of the new, difficult times. At present, things seem quite different. Lack of manpower, fear of further moves by Russia or even an increase in the cost of goods contribute to the reduction of general consumer spending. Add to that high fuel prices and we have a ready scenario for a strong recession. Central banks almost relentlessly raise interest rates to lower inflation, which is an even greater contributor to consumer belt-tightening.

The main problem of European logistics

Many analysts consider the high cost of fuels to be the biggest enemy of the transport sector. If you face it, it should be noted that many of the logistics companies are built on relatively cheap transport. The Covid-19 pandemic has led to a sharp increase in freight transport prices. Many of the entrepreneurs who can afford to redistribute capital or who can quite quickly and effectively adapt to these difficult times,waited, withholding important decisions for covid time. The outbreak of the war in Ukraine is therefore a factor that exacerbates and prolongs the decline in demand for the services of transport companies. Container and air transport were the first to hit the impact of inflation. We can now see the same trend in European road transport. In line with Hopf’s words, let us trust strong people so that they are able to guarantee us good times.

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