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Rigidities in Transportation and Supply Chain Disruptions

Author

Listed:
  • Giulia Brancaccio

    (New York University)

  • Myrto Kalouptsidi

    (Harvard University)

  • Theodore Papageorgiou

    (Boston College)

Abstract

In this paper we provide a simple and intuitive story for supply chain disruptions driven by the rigidities in the transportation sector. Focusing on maritime shipping, we argue that the frequent macroeconomic shocks that shape demand for transportation, meet a highly inelastic supply curve for transportation services. The steepness is driven by equilibrium bottlenecks in ships (transportation agents) and ports (transportation infrastructure). This leads to highly volatile shipping prices and port congestion, affecting importers and exporters worldwide. We discuss how both global trade and inflation react to these costs, so that disruptions pass through to the entire economy.

Suggested Citation

  • Giulia Brancaccio & Myrto Kalouptsidi & Theodore Papageorgiou, 2025. "Rigidities in Transportation and Supply Chain Disruptions," Boston College Working Papers in Economics 1086, Boston College Department of Economics.
    • Handle: RePEc:boc:bocoec:1086
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    References listed on IDEAS

    as
    1. Woan Foong Wong, 2022. "The Round Trip Effect: Endogenous Transport Costs and International Trade," American Economic Journal: Applied Economics, American Economic Association, vol. 14(4), pages 127-166, October.
    2. Xiwen Bai & Jesús Fernández-Villaverde & Yiliang Li & Francesco Zanetti, 2024. "The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory," Economics Series Working Papers 1033, University of Oxford, Department of Economics.
    3. Mary Amiti & Oleg Itskhoki & David E. Weinstein, 2024. "What Drives US Import Price Inflation?," AEA Papers and Proceedings, American Economic Association, vol. 114, pages 106-111, May.
    4. Nektarios A. Michail & Konstantinos D. Melas & Lena Cleanthous, 2022. "The relationship between shipping freight rates and inflation in the Euro Area," International Economics, CEPII research center, issue 172, pages 40-49.
    5. Gianluca Benigno & Julian di Giovanni & Jan J. J. Groen & Adam I. Noble, 2022. "The GSCPI: A New Barometer of Global Supply Chain Pressures," Staff Reports 1017, Federal Reserve Bank of New York.
    6. Myrto Kalouptsidi, 2014. "Time to Build and Fluctuations in Bulk Shipping," American Economic Review, American Economic Association, vol. 104(2), pages 564-608, February.
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    Keywords

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    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • F0 - International Economics - - General
    • L0 - Industrial Organization - - General
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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