What Industrial Co., LTD. (hereinafter referred to as “What shares”) (December 24) issued an announcement that the company and Luoyang Guohong Investment Holding Group Co., LTD.
As the global central bank tightening cycle draws to a close, inflation in major economies is gradually falling back towards target ranges.
However, the recent disruption to the Red Sea route has rekindled concerns that geopolitical factors have been an important driver of price increases since last year, and rising shipping prices and supply chain bottlenecks may once again become a new round of inflation drivers. In 2024, the world will usher in an important election year, will the price situation, which is expected to be clear, become volatile again?

Freight rates react sharply to the Red Sea blockage
Attacks by Yemen’s Houthis on ships passing through the Red Sea-Suez Canal corridor have increased since the beginning of this month. The route, which accounts for about 12 percent of global trade, typically sends goods from Asia to European and eastern U.S. ports.
Shipping companies are being forced to divert. The gross tonnage of container ships arriving in the Gulf of Aden plunged 82 per cent last week compared with the first half of this month, according to statistics from Clarkson Research Services. Previously, 8.8 million barrels of oil and nearly 380 million tons of cargo passed through the passage every day, which carries nearly a third of the world’s container traffic.
A detour to the Cape of Good Hope, which would add 3,000 to 3,500 miles and add 10 to 14 days, pushed prices on some Eurasian routes to their highest levels in nearly three years last week. Shipping giant Maersk has announced a $700 surcharge for a 20-foot standard container on its European line, which includes a $200 terminal surcharge (TDS) and a $500 peak season surcharge (PSS). Many other shipping companies have since followed suit.
Higher freight rates could have an impact on inflation. “Freight rates will be higher than expected for shippers and ultimately consumers, and how long will that translate into higher prices?” said Rico Luman, senior economist at ING, in a note.
Many logistics experts expect that once the Red Sea route is affected for more than a month, the supply chain will feel the inflationary pressure, and then eventually bear the burden of consumers, relatively speaking, Europe is likely to be hit more than the United States. Swedish furniture and homeware retailer IKEA warned that the Suez Canal situation would cause delays and limit the availability of some IKEA products.
The market is still watching the latest developments in the security situation around the route. Earlier, the United States announced the establishment of a joint escort coalition to protect the safety of vessels. Maersk later issued a statement saying it was ready to resume shipping in the Red Sea. “We are currently working on a plan to get the first ships through this route as soon as is feasible.” In doing so, it is also vital to ensure the safety of our employees.”
The news also triggered a sharp drop in the European shipping index on Monday. As of press time, Maersk’s official website has not announced a formal statement on the resumption of routes.
A super election year brings uncertainty
Behind the Red Sea route crisis, it is also the epitome of a new round of geopolitical risk escalation.
The Houthis have also reportedly targeted ships in the area before. But attacks have increased since the conflict began. The group has threatened to attack any ship it believes is heading for or coming from Israel.
Tensions remained high in the Red Sea over the weekend after the coalition was set up. A Norwegian-flagged chemical tanker reported being narrowly missed by an attack drone, while an Indian-flagged tanker was hit, though no one was injured. U.S. Central Command said. The incidents were the 14th and 15th attacks on commercial shipping since Oct. 17, while U.S. warships shot down four drones.
At the same time, Iran and the United States, Israel in the region on the issue of “rhetoric” also let the outside world worry about the original tense situation in the Middle East will be further escalated risk.
In fact, the upcoming 2024 will be a veritable “election year”, with dozens of elections around the world, including Iran, India, Russia and other focuses, and the US election is particularly concerned. The combination of regional conflicts and the rise of far-right nationalism has also made geopolitical risks more unpredictable.
As an important influencing factor of this round of global central bank interest rate hike cycle, energy inflation driven by soaring global crude oil and natural gas prices after the escalation of the situation in Ukraine cannot be ignored, and the blow of geopolitical risks to the supply chain has also caused high manufacturing costs for a long time. Now the clouds may be back. Danske Bank said in a report sent to the first financial reporter that 2024 May mark a watershed in the Russia-Ukraine conflict, and it is necessary to pay attention to whether the United States and the European Parliament’s military support for Ukraine will change, and the United States election may also cause instability in the Asia-Pacific region.
‘The experience of the past few years shows that prices can be heavily influenced by uncertainty and unknowns,’ Jim O’Neil, former chief economist at Goldman Sachs and chairman of Goldman Asset Management, said recently about the outlook for inflation next year.
Similarly, UBS CEO Sergio Ermotti said he doesn’t believe central banks have inflation under control. He wrote in the middle of this month that “one must not try to predict the next few months – it is almost impossible.” The trend seems to be favorable, but we have to see if this will continue. If inflation in all major economies moves closer to the 2 percent target, central bank policy could ease somewhat. In this environment, it’s important to be flexible.”

Source: Internet