Tugrul Vehbi, Serdar Sengul, Daniel Christen, Lucio D’Aguanno and Tom Wise
Shipping costs have increased sharply since the onset of the pandemic, to a magnitude perhaps only a few would have predicted. In this post, we examine the likely drivers and impact of this increase. We argue that (i) both demand and supply factors are responsible for these developments with the former playing a relatively bigger role historically; (ii) shipping costs feed through to consumer prices with a lag; and (iii) therefore, we may expect to see further price pressures in some advanced economies (eg the US and the euro area) from recent surges in shipping rates.
Alex Ntelekos, Dimitris Papachristou and Juan Duan
The 2017 Atlantic hurricane season was the fifth most active in 168 years. It was also one of only six seasons to see multiple Cat 5 hurricanes (Irma & Maria). These two hurricanes, followed similar tracks and, together with Hurricane Harvey, occurred close together. This situation can hinder relief efforts. For insurers it may also lead to resource strain, disputes and unhedged risks, if insurers do not have enough ‘sideways’ reinsurance cover. Our post asks whether three major hurricanes occurring in the US in close succession really was exceptional or, as our analysis of recent data suggests, it might happen more often in future. Is the insurance industry underestimating the likely ‘clustering’ of major hurricanes?