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

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

No 2026-13, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: This paper examines how shipping costs pass through to US 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 US Bureau of Labor Statistics' Producer Price Index (PPI) microdata, constructing a monthly panel of more than 6,000 US 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 producer prices is negligible in normal times but rises sharply during the COVID-19 pandemic, 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)
Pages: 53
Date: 2026-09-21
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Journal Article: Shipping Cost Shocks and US Producer Prices: Normal versus Crisis Pass-through (2026)
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DOI: 10.29338/wp2026-13

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