‘Perfect storm’ hits ports as container rates rocket by 300%

Posted by Sino SCS

Ports are suffering a “perfect storm” from Covid and Brexit with the cost of shipping goods increasing by up to 300%.

Mike Bowden, group marketing manager at logistics and shipping provider Cory Brothers, said port congestion and supply chain costs had led in some instances to the price of shipping a container rocketing to $8,000.

He said: “Shipping firms have exponentially increased freight rates, with current standard cargo import prices increasing by 200-300%. At the beginning of the year shipping containers were around $1,500 and $1,800, as of today its anything from $6,000 and $8,000 per container.” 

Bowden said at the start of Covid a sudden “scale down” of supply chain mechanisms, including air and sea ports, caused a worldwide freight bottleneck. 

Retailers have expressed concern over product shortages in the run-up to Christmas, as pressure mounts on ports from increased consumer demand and businesses preparing for the end of the Brexit transition period.

Ports affected include London Gateway, Southampton, Rotterdam, Antwerp and Felixstowe, which is the busiest port in the UK, managing 40% of imports and exports. Its owners have said congestion could last into the new year.

Bowden said whether ports were working very efficiently or not, they were going to suffer with congestion due to an influx of cargo, and businesses will feel the effects of higher shipping costs and delays.

Among businesses affected are book publisher Idesine, which has 4,000 books stuck on a ship that has been trying to dock at Felixstowe since 31 October, according to the BBC. 

The Cotswold Company, a furniture retailer that imports wooden furniture from Asia, said it had become more difficult to obtain stock.

Alan Joseph, operations director at The Cotswold Company, told the BBC: “Airlines are not moving as much cargo because there are fewer passenger flights. The railway from China to Germany is now quoting rates in excess of $10,000 per container – which is not much of an option.”

He added: “It’s a worrying sign that big shipping lines are drastically reducing UK volumes because so much of the imports in the UK arrive through our ports, and if there’s less coming there are less supplies of everything that gets imported.”

Joe Burgwin, head of supply chain at the garden furniture firm Supremo Leisure, said: “Previously for us, shipping cost $1,400-$1,500 tops per 40ft unit, which was manageable.

“Now in negotiations with freight companies, prices have more than doubled and there are fears it could move even higher. We’re predicting this to last until at least January, which makes business planning pretty challenging.”

Zoe McLernon, policy manager of multimodal at Logistics UK, said: “As an industry, logistics already works on very low margins and cannot absorb the costs of delays which are not of their making. 

“We are maintaining close contact with Felixstowe to monitor the issues occurring as a result of the delays there, and will continue to support our affected members until the situation eases. It is vital that congestion at the port is eased as soon as possible.”

The NHS has been conducting an operation to clear containers full of PPE that have been clogging Felixstowe. Containers are being moved to other sites, including former airfields and vacant land, with 1,000 containers moved in a week, according to the East Anglian Daily Times.

Author Sino SCS
中品供应链-Sino Supply Chain Service