With the international shipping market raising prices by an unsustainable 700% over the last year, the British Home Enhancement Trade Association (BHETA), which counts housewares suppliers among its members, is spearheading a campaign to secure intervention from the Competition & Markets Authority (CMA).
“Suppliers will only be able to absorb a certain percentage of these increased costs, resulting in higher costs for the end consumer,” states Will Jones, chief operating officer of BHETA.“Many smaller suppliers will not be as successful in passing increases onto the trade and this will result in the supplier base reducing or consolidating, which will impact on competition, employment and ultimately the whole economy. Speaking frankly, an investigation needs to determine if shipping companies are profiteering from the Covid pandemic, and if shipping companies are controlling supply and demand to raise prices.”
He continued: “with non-essential stores now re-opened in the UK, there are additional demands on stock, and a bottleneck in supply caused by shipping companies is the last thing the UK economy needs at such a sensitive time as we emerge from lockdown. This issue will cause significant gaps on shelves, company closures, drive huge inflationary pressures, massively reduce profits and therefore corporation tax, and cause a real shock to national economic wellbeing as well as to individual consumers. This is not only an issue for suppliers, but for everyone.”
A recent BHETA member survey confirmed that suppliers who import either product, components or raw materials are currently facing exorbitant charges in relation to freight costs which are having a serious and detrimental impact on their businesses. Many companies are also being charged additional costs such as increased demurrage and cancellation charges in addition to the increased costs from importers and freight forwarders.
The issue is compounded by lack of supply of containers and availability of freight space. The general feeling from suppliers, freight transport companies, and the industry in general, is that these increased costs are set to remain in place at least through to 2022.
The cost of a 40ft container from the Far East has increased from around $2,250 to $18,900 in the past year, in many cases exceeding the value of the goods being shipped, making it unprofitable to import without passing on significant price increases to UK consumers.
Top: International trade has been hit by a worldwide shipping crisis, with the cost of transporting containers rocketing.