British businesses are facing thousands of pounds in extra costs and consumers the prospect of higher prices as a global shortage of containers continues to cause chaos.
The average cost of shipping a 40-foot container from Asia to Northern Europe, including the UK, has skyrocketed from $1,752 last February to more than $8,000 at the end of last week.
Meanwhile the manager of a Leeds-based flooring seller which has enjoyed a record year of sales told This is Money he had recently been invoiced nearly $16,000 for shipping a container from China.
The cost of importing containers from Asia and China to the UK has skyrocketed from $1,752 last February to more than $8,000 in the same month this year
His costs have risen from $2,000 per container a few months ago to $10-14,000 on average.
James Langton, 39, said: ‘It’s one of the most insane hikes by the shipping lines I’ve ever seen. Prices have been rising since Christmas and every time we think they can’t get any higher. It’s insane.’
He said the company, which imports around 50 containers a month, the bulk of which are 40-foot, was paying around £1.50 more per square metre of material ‘which has to be passed onto the consumer’.
He added: ‘We can’t sustain $16,000 per container ad infinitum or without passing costs on. It’s no way to grow a business.’
James Langton, general manager of Leeds-based Luxury Flooring. The company has enjoyed a record year of sales during the lockdown but has had difficulties with its imports recently
Close to four in five small and medium-sized import businesses surveyed by the logistics company Freightos in January said they had had difficulties importing containers over the last six months.
The survey of 1,000 businesses found 34 per cent had put up their prices and just over a quarter were reporting reduced margins.
Of those increasing their prices, just under four in five had done so by up to a fifth, while a fifth of small businesses were having to increase their prices by more than 20 per cent.
The world’s largest shipping lines have been charging importers and the middlemen who operate their logistics higher shipping rates over the last year due to a shortage of containers in Asia, where large numbers of British businesses get their goods from.
Some lines have also been hitting importers with three-figure surcharges on containers imported into the UK.
Some 77% of small businesses surveyed by the logistics firm Freightos said they had been hit by supply chain issues as a result of the pandemic. 34% have put up prices
Helen White, founder of Made.com, which imports lighting manufactured in China, told the BBC last month she was being charged close to $14,000 a container up from just over $2,000 in November.
‘It’s really hard for a small business to absorb those costs’, she said. ‘We’ll be making a loss on the goods we’re selling.’
The number of containers produced fell by 40 per cent in the first half of 2020 compared to 2019 as countries like China grappled with the coronavirus pandemic.
Meanwhile fewer containers are being sent back from Europe and North America, which is causing availability to fall and prices to rise.
‘We’re finding a lot of containers are going to the US and they don’t want to send them back to China’, Langton added.
Many of these containers have instead been causing problems at ports elsewhere where they are piling up on the dockside, including at the Port of Felixstowe, Britain’s busiest container port.
Luxury Flooring’s warehouse. The company imports flooring made in China into the Port of Felixstowe but is being hit by massive increase in the cost of importing containers
This is Money has reported on the problems facing the port, which handles close to half of Britain’s container trade, since last September.
In an update on its website posted on Valentine’s Day, it said: ‘The Port of Felixstowe, like other major container ports worldwide, is still experiencing high container volumes and dealing with the consequences of the ongoing coronavirus pandemic.
‘We are working closely with partners to support vital supply chains.’
Felixstowe was named one of the worst-performing ports in Europe and Asia by IHS Markit late last year, with ships taking around 32 hours to be loaded or unloaded at the docks. The average among comparable ports was 24 hours.
The Port of Felixstowe was found by IHS Markit to be one of the worst-performing ports in Europe, with ships spending 8 hours unloading there compared to an average of its rivals
But although Felixstowe, along with other British ports like Southampton, are still facing difficulties Langton said his business, online seller Luxury Flooring, was no longer having issues getting stock in, as had been the case last year.
He said: ‘The supply is fairly regular provided you’re prepared to pay. The stock isn’t a major issue, but the prices are.’
But while he hoped prices would fall by the end of April, other analysts have suggested higher shipping costs could continue for a while.
Although there is usually a ‘slack season’ after the Chinese Lunar New Year holiday, which began last Friday, this may not be the case this year.
Rolf Habben Jensen, chief executive of one of the world’s largest shipping lines Hapag-Lloyd, said it was ‘flooded out with bookings’ after the Chinese New Year holiday ended
‘One thing we can say for sure is that there won’t be a slack season in 2021’, one logistician told The Loadstar, which covers the global shipping industry.
Meanwhile it also reported that some of the world’s biggest shipping lines are fully booked up with cargo after the end of the seven-day holiday.
Meanwhile China is also struggling with ‘severe’ trucking shortages due to quarantine and coronavirus containment measures put in place by the Chinese Government, according to the logistics firm Woodland Group.
‘Only 5-10 per cent of truckers are expected to work over the next few weeks’, it said, with ‘bottlenecks expected to remain in place into the second quarter of 2021.’
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