Supply chain disruptions have become a recurring feature of recent economic dynamics and an increasing concern in inflation policy discussions. This column argues that inflationary effects of these disruptions operate through more than higher import and transportation costs: when supply-chain bottlenecks make products harder to replenish, firms’ pricing power increases, and these price increases are further amplified by strategic responses to competitors’ disruptions. Using new data that link consumer prices to US maritime import shipments by consumer goods producers, the authors show that these competitive pricing spillovers substantially amplified the price effects of supply chain disruptions in the aftermath of the pandemic in the US.
Changing global trade policies, geopolitical conflicts, pandemics, and climate-related shocks all put pressure on global supply chains (Figure 1), bringing delivery delays, transportation costs, and import costs into the macroeconomic debate. A practical policy question remains: when supply chains are disrupted, how far does the shock travel into the prices households pay, and through what channels can it lead to broad-based price increases?
Recent research and policy discussion point to both the importance of these disruptions and the many channels through which they affect macroeconomic outcomes. Di Giovanni et al. (2023) show important complementarities between demand-side stimulus and supply constraints during the pandemic; Franzoni et al. (2024) attribute shifts in large firms’ market power to disruption episodes; Martin et al. (2022) discuss the importance of inventory management; and Schwellnus et al. (2023) highlight the role of geographic diversification in mitigating supply chain disruptions.
In our recent work (Baslandze and Fuchs 2026), we contribute to this discussion by leveraging newly constructed micro data on consumer prices and US maritime import shipments by consumer goods producers. We show how disruptions faced by firms – including higher imported goods costs, higher transportation costs, and especially delivery-related availability constraints – shaped consumer prices both directly, through affected firms’ own prices, and indirectly, through the pricing responses of their competitors in the same product market.
Figure 1 Supply-chain pressure and US core CPI inflation
Note: The figure plots the New York Fed Global Supply Chain Pressure Index and 12-month US core CPI inflation.
Costs are only one part of the story
A familiar story says that higher import prices and shipping costs raise firms’ costs, and some of those costs are passed on to consumers. While this channel is important, recent disruptions have exposed a second channel: product availability. A firm that cannot replenish goods on schedule faces a different pricing problem from one that simply faces higher unit costs. Promotions become harder to maintain, stockouts become more likely, and remaining inventory becomes more valuable. Supply-chain disruptions therefore matter not only because they make goods more expensive to obtain, but because they make goods harder to replace.
Firms selling similar products also react to one another’s prices. When one firm raises prices because of higher costs, competitors may raise their own prices in response, a force often called strategic complementarities in pricing (Amiti et al. 2019). But scarcity can relax competition as well. If a firm’s competitors face product availability constraints, customers have fewer alternatives. A firm that is not directly disrupted may then face stronger demand and raise prices too. When cost and availability shocks are widespread, price increases can therefore become broader than a calculation based only on each firm’s own shocks would suggest.
Linking shipments to checkout prices
We study these mechanisms using a new match between upstream shipping data and downstream consumer prices. On the upstream side, we use shipment-level US maritime Bills of Lading from S&P Global Panjiva, which record importers, shipment timing, ports of entry, and product classifications. On the downstream side, we use Numerator consumer transaction data, which record itemised receipts from bricks-and-mortar and online purchases and allow us to measure prices at the firm–product–month level.
The key measurement idea for delivery shortfalls is simple. For each importing firm, we compare recent cumulative imports with that firm’s own pre-pandemic schedule, using 2019 as the benchmark. A positive delivery shortfall means the firm received less than expected, given its usual seasonal pattern and product portfolio. Because we do not observe each firm’s inventories directly, delivery shortfalls are best interpreted as a proxy for replenishment pressure and product availability constraints. We also construct cost measures from changes in unit import values and freight costs. The series are depicted in Figure 2. This lets us distinguish, as far as the data allow, price pressures from higher costs from those associated with delayed or missing replenishment.
Identification comes from comparing price changes across firms selling in the same product category at the same time, but with different pre-pandemic exposure to product lines and ports that later experienced disruptions. For example, firms that historically relied more on ports where dwell times later increased were more likely to experience delivery shortfalls, even when selling in the same consumer market as less-exposed firms. This shift-share variation helps isolate supply-driven disruptions from firm-specific demand shifts.
Figure 2 Delivery shortfalls and cost shifters
Note: The figure shows delivery shortfalls (3-month moving average) and two cost shifters: exposure to changes in freight costs and import unit costs.
What the micro evidence says
The first result is that delivery shortfalls pass through to consumer prices in a sizable way. In our preferred IV specifications, the pass-through from delivery shortfalls is around 0.25–0.27, depending on the specification. This is comparable in magnitude to the estimated pass-through from lagged import cost and freight cost shocks. Put differently, a worsening in measured delivery conditions is linked to faster price growth, even after comparing firms within the same product market and controlling for import cost pressure.
We also find that the response to delivery shortfalls grows when they persist over longer horizons. This is consistent with the idea that a brief delay can sometimes be absorbed through inventories or promotions, but a repeated failure to replenish is harder to smooth.
The second result is that competitors’ disruptions matter. Firms raise prices when their competitors face delivery shortfalls, with competitor shortfall pass-through around 0.11–0.13, roughly half the own-shortfall effect. This is the strategic complementarity channel that can amplify local supply shocks into broader price pressure.
Notably, these spillovers reach firms without direct maritime import exposure. Non-importing firms also raise prices when importing competitors are disrupted, consistent with a changing competitive environment that reduces the pressure to keep prices down.
From firm shocks to broad price pressure
These estimates help explain how supply chain disruptions can generate aggregate price pressure. A shock first raises prices for firms that directly face higher costs or tighter availability. But when many firms in a product market are disrupted at the same time, competitors respond to one another. The market-wide price response can therefore exceed the direct effect of each firm’s own exposure.
We illustrate this in a simple accounting exercise that feeds the observed paths of delivery shortfalls, freight costs, and import unit costs through the estimated pricing relationships. The exercise shows that during and after the pandemic, strategic pricing spillovers substantially amplified the direct effects of firms’ own rising cost pressures and delivery-related availability constraints.
Policy implications
The first policy lesson is about inflation diagnostics. If disruptions are becoming a more regular feature of the inflation environment, policymakers should look beyond demand conditions and input prices. They should also monitor high-frequency indicators of inbound flows, delivery shortfalls, and port congestion, as well as stockout risk where available. When availability constraints bind across many firms, price pressure can spread even if measured cost pass-through looks modest.
The second lesson is about resilience. Our results point to supply chain reliability and speed of replenishment as important resilience margins. Port capacity, warehousing, better routing options, and diversified logistics relationships may reduce the chance that temporary shocks turn into persistent shortfalls.
Finally, competition matters. Supply shocks are more inflationary when scarcity relaxes competitive discipline. Policies that preserve market contestability and reduce bottlenecks in transportation and logistics can therefore help limit how much supply disruptions translate into higher prices.
The price of delay is therefore not just the extra cost of moving goods. It is also the price effect of products becoming harder to find – and of firms reacting to one another when scarcity hits many sellers at once.
Source : VOXeu
