Cost of shipping goods to UK soars amid Covid pandemic

Price of some containers quadruples as firms brace for further disruption in run-up to Christmas and Brexit

British consumers have been warned they face higher prices as jams at ports and problems in the global shipping industry cause a pre-Christmas surge in the cost of shipping goods to the UK.

Executives in freight services companies said they have seen prices for containers from mainland China triple or even quadruple in the course of a few months.

A 40ft container from China to northern Europe that might have cost $1,500 (£1,100) six weeks ago was quoted at £9,000 on Wednesday morning, one person said. Another said the price of a 20ft container had risen from $800 in the summer to $3,200 now.

The price hikes, which are evident across the world, have been caused in part by disruption from the coronavirus pandemic, which has shifted production schedules and demand while playing havoc with factory supply chains.

Dean Reynolds, the commercial director for Globelink Fallow, a shipping services company, said he had never before seen such expensive shipping rates. Price hikes would inevitably be passed on to UK consumers, he said.

“If you’re bringing in two or three pallets of pushchairs, for example, the cost will increase astronomically. It’s the UK consumer who will pay.”

He added: “I didn’t know it was going to be this bad. The government hasn’t really got hold of this. They’ve stuck their head in the sand because they’ve got an awful lot else on the plate.”

This week the toy retailer the Entertainer warned that the delays could mean higher prices for shoppers in 2021 as retailers struggled to absorb rising costs.

Honda was forced to temporarily pause production of its Civic cars in Swindon, Wiltshire, on Wednesday because of shortage of goods. The carmaker is also considering the much more expensive option of flying in key parts, a strategy previously chosen by the British carmakers Bentley and Jaguar Land Rover.

The Guardian previously reported that the Japanese company and other rivals with UK factories had built up stocks of parts for the fourth time to see them through potential Brexit disruption, but the latest delays were to parts from Asian factories, leaving Honda unprotected.

Dean Reynolds, the commercial director for Globelink Fallow, a shipping services company, said he had never before seen such expensive shipping rates. Price hikes would inevitably be passed on to UK consumers, he said.

“I didn’t know it was going to be this bad,” Reynolds said. “The government hasn’t really got hold of this. They’ve stuck their head in the sand because they’ve got an awful lot else on the plate.”

Companies across the economy are braced for further disruption before Christmas and the end of the Brexit transition period on 1 January, when all the UK’s goods trade will move to new rules that have yet to be agreed with less than three weeks until they come into force.

Retailers last month said there might be product shortages for the crucial Christmas trading period, while builders have warned that some materials were running short because of import delays.

Ports across the UK have faced disruption, although delays at Felixstowe in Suffolk, the UK’s largest port, have come under particular scrutiny. Felixstowe has partly blamed the blockage on a backlog of personal protective equipment ordered by the government to cope with the pandemic.

Tim Morris, the chief executive of UK Major Ports Group, a lobby group, blamed “unprecedented volatility in global supply chains” because of the pandemic.

Michael Gove, the Cabinet Office minister with responsibility for Brexit planning, on Wednesday acknowledged the issues at the ports but said they were global problems.

Ed Miliband, the shadow business secretary, said: “Businesses have been sounding the alarm for weeks about the problems at ports. While there are pressures caused by Covid-19 all over the world, no other country is facing the kind of uncertainty we are around the end of the transition period.

“Car production halting, Christmas presents possibly going undelivered, and food supplies being thrown out are terrible for businesses across our country.”

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Executives in the freight forwarding industry said many vessels sailing from east Asia were avoiding UK ports because of the disruption, moving instead to other northern European locations such as Rotterdam in the Netherlands, Zeebrugge in Belgium, or Hamburg in Germany. Goods destined for the UK then face the same problem of finding space on ships that will visit British ports.

“The shipping lines are making a huge amount of money,” Reynolds said. “There’s making hay and there’s building haystacks.”

Logistics UK, a lobby group that represents ports and freight companies, said the government should help to plan extra freight trains from ports to try to ease the congestion, using capacity left slack by the absence of passengers.

Zoe McLernon, a policy manager at the group, said she thought the worst of the disruption had peaked around Black Friday but added that the pandemic, Christmas demand and the imposition of new Brexit customs checks had created a “perfect storm for the industry”.


Jasper Jolly

The GuardianTramp

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