High Cost of Cargo Shipping Could “Reverse Globalisation,” Report Says

Rising international shipping costs driven by high oil prices could effectively wipe out decades’ worth of trade liberalisation, according to new research from CIBC World Markets.

By making it substantially more expensive to ship cargo over long distances, higher freight costs are likely to change global trade and production patterns, said the Canadian investment bank. They may also make it easier for domestic manufacturers to withstand competition from lower-wage countries. For instance, US steelmakers have already become competitive against Chinese imports for the first time in more than a decade.

“In a world of triple-digit oil prices, soaring transport costs, not tariff barriers, pose the greatest challenge to trade,” argue the study’s authors, Jeff Rubin and Benjamin Tal.

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