Supply bottlenecks are pushing up costs for manufacturers | The Economist

Supply bottlenecks are pushing up costs for manufacturers

The effect on inflation should be temporary

LOGISTICS MANAGERS have gained a few grey hairs over the past year. When the virus first spread, they faced a collapse in demand. Now they are scrambling to fill a surge in orders. One in five purchasing managers report “port” or “shipping” delays, the most since 2004, says IHS Markit, a data provider. Such is the shortage of container space that the Freightos Baltic Index, a measure of container prices, rose to over $4,000 on January 15th, compared with $1,200-1,600 in 2019.

For most goods shipping makes up a tiny share of a product's total cost, says Florian Frese of Container xChange, an online platform. But other prices are rising too. Commodities are on a tear. A survey by IHS Markit found that manufacturing-input prices last month rose at the fastest pace in nearly ten years.

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