The impact of trade restrictions due COVID-19 on maritime shipping costs

Abstract

The maritime shipping has historically played a pivotal role in facilitating global trade, serving as the artery of the international trade and economy transporting goods across international borders due to its cost-effectiveness, reliability, and capacity to carry large quantities of cargo. Until the COVID-19 pandemic widespread forcing governments and health authorities to impose trade restrictions such as Lockdowns, port closures, and reduced labor availability disrupted supply chains, leading to cargo delays and bottlenecks. Ships facing extended waiting times at ports, crew changes becoming challenging, and container shortages exacerbating existing problems. These constraints significantly slowed down the movement of goods, leading to delays and increased uncertainty for businesses and consumers. The impact of these disruptions extended to shipping costs. Freight rates skyrocketed as demand for shipping services outstripped supply. Limited capacity, coupled with increased operational costs due to safety measures and crewrelated challenges, pushed shipping rates to historic highs. Businesses found themselves grappling with elevated transportation costs, which were subsequently passed on to consumers. The maritime shipping industry, while resilient, faced a myriad of challenges in adapting to the new normal imposed by the pandemic.