More Supply Chain Woes – Costs For Shipping By Sea Container Up More Than 500%
July 2, 2021 by Dave Haynes
There has been lots of discussion the last few months about the industry impacts of shortages of everything from semi-conductors to glass and even wood pallets for shipping, but now we’re learning there’s another, very different supply chain problem – shipping costs.
The painfully high costs of air freight see most manufacturers using the much slower option of sea containers and ships – but now sea cargo costs have risen sharply.
Bloomberg and other media outlets are reporting how the cost, for example, of shipping a 40-foot steel container of cargo by sea from Shanghai to Rotterdam now costs $10,522, 547% higher than the seasonal average over the last five years, based on data from the consulting firm Drewry Shipping.
With upwards of 80% of all goods trade transported by sea, Bloomberg reports, freight-cost surges are threatening to boost the price of everything from toys, furniture and car parts to coffee, sugar and anchovies, compounding concerns in global markets already bracing for accelerating inflation.
“In 40 years in toy retailing I have never known such challenging conditions from the point of view of pricing,” Gary Grant, the founder and executive chairman of the U.K. toy shop The Entertainer, said in a interview. He has had to stop importing giant teddy bears from China because their retail price would have had to double to add in higher freight costs. “Will this have an impact on retail prices? My answer has to be yes.”
As with other shortages being seen of late, it’s not as simple as just saying it is the pandemic and it will get better. The situation relates to a confluence of factors, like soaring demand, a shortage of containers, over-saturated ports, not enough ships and too few dock workers.
The problem is most acute with long-haul shipping like Asia to western Europe. Long-haul rail can’t do the kinds of volumes of these mega-ships.