Shipping Cost Shocks and US Producer Prices: Normal versus Crisis Pass-through

Simon Gilchrist, Bin Wei, Vivian Z. Yue and Egon Zakrajšek ()

Policy Hub, 2026, vol. 2026, issue 7, 54

Abstract: This paper examines how fluctuations in shipping costs pass through to U.S. producer prices. We link confidential shipment-level import transactions from the Census Bureau's Longitudinal Firm Trade Transactions Database (LFTTD) to confidential firm-level producer prices from the Bureau of Labor Statistics' Producer Price Index (PPI) microdata, constructing a monthly panel of more than 6,000 U.S. manufacturing importers from 2005 to 2022. Using local projections and Bartik-style instruments based on route-level shipping-cost variation, we find that pass-through to domestic producer prices is negligible in "normal" times but rose sharply during the COVID-19 pandemic, a period when shipping costs surged broadly across routes and source countries. We interpret this state dependence through a menu-cost model with imported intermediate inputs and endogenous substitution between imported and domestic inputs.

Keywords: supply chain disruption; shipping costs; inflation; pass-through; producer prices (search for similar items in EconPapers)
JEL-codes: E31 F14 F41 L11 (search for similar items in EconPapers)
Date: 2026
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Working Paper: Shipping Cost Shocks and US Producer Prices: Normal versus Crisis Pass-through (2026)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:a00068:103990

DOI: 10.29338/ph2026-07

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