St. Louis Fed, Report: Navigating the Waves of Global Shipping, Drivers and Aggregate Implications

“This paper studies the determinants and aggregate implications of global shipping dynamics. Motivated by salient features of the dynamics of global shipping that we document, we develop a multi-country dynamic model of international trade with endogenous global shipping supply. We find that the model can account for salient features of global shipping dynamics. In particular, the model accounts for a significant fraction of the unprecedented increase of international shipping costs observed in the aftermath of COVID-19. We find that accounting for these dynamics of global shipping have important implications for the dynamics of aggregate economic activity. Our findings can be important for shaping future policies in response to such developments, as well as evaluating the potential limitations of our state-of-the-art models of international trade and macroeconomic dynamics.”