A perfect storm of factors – demand increase, container shortages, crowded ports and insufficient ships and port workers has seen the cost of shipping containers from China increase by over 500% since the beginning of 2020. Worse still, there is no sign of costs reducing in the near future, meaning many importers will have to pass on the increases to customers in the form of price rises.
The lockdowns imposed in most countries to counter the Covid pandemic limited the types of products and services consumers could purchase, driving higher demand for other products. For example, families no longer able to eat out, go to the pub or cinema and take holidays choosing to spend money on home and garden improvements instead can easily drive a significant increase in demand for imported goods from furniture, white goods and soft furnishings to construction items. One major shipping company expects sustained demand for the transportation of consumer goods to continue at least to the end of 2021.
The imposition of Covid-secure working practices impacted on the efficiency of commercial ports, resulting in a build up of containers on the dock-side, and a reduction in containers available to be booked, filled and shipped. Ships waiting longer than normal to be unloaded due to restricted berthing spaces further reduces the available shipping capacity. Whilst restrictions are being eased in the UK, there have been recent Covid outbreaks in some export hubs in Asia, including China
As if this wasn’t bad enough, we then had the Evergreen container ship getting stuck in the Suez canal for six days in March, resulting in delays to traffic either waiting to pass through the canal or having to re-route around South Africa.
Many companies who import goods from China have tried to absorb the cost increase, but are now having to find ways to either reduce other costs, find alternative suppliers or pass on the cost increase to their customers. Those importing bulky or low-value items have been hit hardest. A major UK toy shop chain has reportedly stopped importing giant teddy bears from China because they would have had to double the retail price to cover the increased freight charges.
At Winster we have experienced all these issues. The shipping cost for a container has risen from $2,000 in early 2020 to an average of $14,000 this summer. A shortage of drivers in the UK often adds a day or more to the container arrival dates (have you noticed how many signs there are advertising for drivers?). Finally, the Brexit changes seem to have driven more EU / UK trade to ships rather than crossing the channel on a truck which has further reduced available shipping capacity, and a major UK port changed IT systems which brought teething troubles and more delays.
As always, the Winster team have been working incredibly hard with suppliers and customers to maintain continuity of supply, but it has certainly been a testing and expensive time.