Consumers could face rising prices as shipping costs forecasts to soar 30 percent in 2022 | City & Business | Finance

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The forecast comes with prices already having risen considerably across the industry this year with companies also reporting lack of availability of containers. Earlier in the year the British Chambers of Commerce warned that a survey of its members found hire costs increasing seven-fold compared with previous years. If these pressures continue into next year it’s becoming increasingly likely costs will have to be passed on to consumers. Speaking to Express.co.uk James Hookham, Director of the Global Shippers Forum said: “Retailers are resisting any price increases but quite a few are now saying this, and other pressures, such as labour shortages are all building up.”

A spokesperson for Make UK, the trade body representing manufacturers, told Express.co.uk there were many reports of “astronomic” costs for shipping containers adding manufacturers were seeing inflationary spikes of around 10 percent on their costs with some even having to shift to air freight.

Head of Research at Transport Intelligence Nick Bailey blamed a “potent mix of forces” for the rise in shipping rates.

Mr Bailey explained: “These forces include upstream manufacturing challenges, labour issues (mainly related to Covid outbreaks at manufacturers and producers in Asia), the availability of shipping capacity and a lack of alternatives when capacity is tight or unavailable, container shortages and congestion at gateway and destination ports.

“It will take time for these drivers to unwind, particularly as demand from the US and Europe is driven by stimulus packages, economic growth, strong consumer demand and a restocking cycle amongst manufacturers and retailers.

“Shipping rates are likely to remain very volatile in the short-term with demand high, production challenges in China and areas of Asia more widely, congestion and capacity issues still very prevalent, especially at the port of Los Angeles/Long Beach for example.”

Mr Hookham also said shipping companies were currently able to communicate with each other over rate increases without being bound by competition rules.

In August Make UK and the British Chambers of Commerce wrote a joint letter to regulator the Competition and Markets Authority requesting a formal investigation into shipping costs and their impact on UK businesses.

A spokesperson for the UK Chamber of Shipping said: “As demand for goods around the world has increased, so inevitably has the cost of moving these items.

“However, many container lines have brought on extra capacity and moved more ships on to busier trade routes.

“In the last few weeks we have actually seen a drop in some freight rates.

“We continue to engage with the Government’s freight council and National Economic Recovery Taskforce to help alleviate some of the issues we currently face.”

 

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Another additional cost to come will be a six percent increase in fees announced by the Suez Canal Authority set to kick in next year.

It is likely this will end up being passed on directly to importers as an automatic surcharge.

Looking to the future Mr Bailey suggested shipping rates should return closer to historical norms however predicting when remains a major challenge.

“It currently looks as though it’s likely to be 2023 before all the drivers of rate rises unwind, the restocking cycle has played out and the shipping lines receive the new capacity ordered so far,” he explained.





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