Q+A: Future costs of freight?

Q+A at Seminarium Chile on future of logistics and supply chain management - by keynote speaker Patrick Dixon.

I have shipping costs risen from - say - $800 per container to over $9000 for the same journey and what next? (July 2022).

In my Futurist book The Future of Almost Everything, I predicted that Central Banks would tend to encourage inflation rather than risk deflation (whatever they say publicly).

And that prices for commodities etc would fluctuate widely. And both turned out to be correct.

Governments pumped trillions of dollars into the global economy during COVID, were slow to withdraw the stimulus, and slow to increase interest rates from near zero.

What followed inevitably was increasing inflation even before the economic disruption related to Russia's invasion of Ukraine. Inflation happens when everyone is spending and there is not enough product or services to meet demand.

And that is what has happened during COVID.

The first inflationary shortage was locked up people diverting leisure and travel spending into buying things for their homes, or improving their homes. That meant a lack of goods just as China and other manufacturing nations were hit by COVID-related factory disruption. Not helped by similar COVID disruptions in loading and unloading container ships.

The second inflationary shortage was unlocked up people using spare cash saved up during COVID to have lots of holidays, meals out and other leisure experiences - as well as continuing to improve their homes.

Hence chaos in airports across Europe which were unable to scale up staffing levels again in time.

Now these major disruptions in shipping costs will fall back towards normal.

In no other market is a 10 fold increase in costs sustainable for long without massive investment as people look to make money from shortages and crisis, which will increase capacity.

And then of course the market is likely to overshoot with overcapacity for a while."

* "How AI Will Change Your Life - A Futurist's Guide to a Super-Smart World" - Patrick Dixon's latest book on AI is published in September 2024 by Profile Books.  It contains 38 chapters on the impact of AI across different industries, government and our wider world, including chapters on the future impact of AI on logistics and supply chain management.