News & Views

Shipping Goes Crazy

Mike Tattam, Lakes Sales & Marketing Director and BMBI Expert, says shipping has gone crazy and we’re all likely to be hit by shortages, delays and cost surcharges, however they’re described.

When the Secretary of State for Health says the new mutant Covid virus is out of control neighbouring countries panic and shut their borders. But far from being panicked by border closures, threats of food shortages, vaccine supplies getting stuck in the supply chain, or the sight of 20 miles of stationary trucks lining the M20 on the way to the port of Dover, the public has grown blasé and weary of crises.

More serious for construction though, reports of congestion in Felixstowe and Southampton ports in the last few weeks have spilled into the headlines and onto the main news channels. But it’s not a local British difficulty, it’s a global problem that’s getting rapidly worse.

It’s been described as a perfect storm, with a number of causes including a shortage of containers because of unprecedented demand, ships mothballed with their containers and crew, and carriers reluctant to take bookings for the UK because of the congestion at UK ports. Container ships are waiting at sea or sailing to the next port and calling in on their way back. Some forwarders, anticipating post-Brexit chaos, are refusing to ship to the UK at all.

So, shipping costs are rising rapidly to eye-watering levels.

In August the container freight rate (for a 40’ High Cube) was $1,675. By 1st November this had risen 72% to $2,875 (see chart). As of December 1st it was $7,000. In the period December 15th-31st rates have risen to $9,750. Shipping experts are forecasting $13,000-$14,000 a container in January.

In the words of one shipper: ‘shipping costs have gone mad.’ While many suppliers have tried to absorb these steeply rising costs, it’s become extremely difficult to continue to do this with costs projected in January to be seven times greater than a year ago. It’s inevitable we’ll see temporary surcharges alongside these significant rises, but I urge the supply chain to work together so we can all get through this next wave as best possible. I’d also emphasise that merchants should stay with their supply partners to ensure continuity of supply and not switch, hoping to avoid temporary surcharges.

This guest blog was written by Mike Tattam, Sales & Marketing Director Lakes

Back to Blog