The cost of importing containers full of Asian consumer goods into the UK hit an all-time high after demand surged in the weeks leading up to Christmas and the UK’s exit from the EU.
Shipping experts believe the UK has been dealt a double blow by the impact of the coronavirus, which has disrupted global shipping supply chains, and the end of the Brexit transition period, which has caused a sharp increase in imports during the last months of 2020.
Container freight rates from Asia have nearly quadrupled since November to $ 10,000 for a 40-foot unit for the first time, amid a global rebound in demand for consumer goods and materials and congestion in UK ports, where many empty containers are stuck.
Vincent Clerc, commercial director of Maersk, the world’s largest shipping company, said on Wednesday that there were “simply not enough containers in the world to meet current demand”. He said recent lockdowns in the UK and across Europe could even spur new online purchases of consumer goods such as home exercise equipment and furniture for “at least for a few weeks … C it’s really crazy how much we are moving at the moment, huge sums. , ” he said.
The giant container ships left off the coast of Singapore during the strictest coronavirus measures last spring have already returned to the shipping market to help ship containers to Europe, according to Simon Sundboell, boss of the maritime intelligence company eeSea. “Demand has returned to pre-coronavirus levels, it could be even stronger. Maybe people are buying TV screens rather than going on vacation to Thailand, ”he said.
However, the slowdown in shipments in the first months of 2020 made it more difficult to fill empty containers with goods, as it upended the complex global shipping industry, he said.
Simon Wolfson, the boss of fashion retailer Next, said earlier this week that the company’s clothing inventory was down 10% from last year due to shipping delays of two to three weeks from Asia. “It’s not bringing it into the country that’s the problem; it’s putting it in a container at the other end, ”he said.
George Griffiths, head of global container freight markets at S&P Global Platts, said the lack of empty containers in Asian ports was behind the surge in container prices. The S&P Global Platts index for container freight prices, which hit a record $ 10,000 earlier this week, is expected to rise further and could push up the cost of consumer goods, he said.
“The persistent problem is that there is just a shortage of empty containers in the major export centers, especially in Asia, so there are none for exporting goods to the European and UK markets. . It created a real imbalance, ”he said.
The global rebound in demand for maritime transport has been compounded by Britain’s haste to stock up on materials and goods ahead of the Christmas season and by severing ties with the EU. This has left many shipping containers stranded by warehouses and at docks in UK and European ports, after the freight influx at the end of last year.
In the past, it would have taken two to three days for a container arriving in the UK to be unloaded at nearby warehouses and back to port to begin the journey back to where it came from. But in recent months, in some cases, it took Skeleton Port staff, working under Covid-19 restrictions, two to three weeks to empty the containers, Griffiths said.
Inbound shipments, which included 11,000 containers of medical PPE, plunged UK ports into chaos, with mountains of containers stacked up. Although container stacks are starting to shrink, rebalancing the global supply chain is expected to take months, in part because of coronavirus operating restrictions.
“Some container coatings don’t stop [in the UK] because it is not worth incurring hours of delay and higher costs. The liners that are ready to stop in the UK charge a premium, given the limited supply, ”Griffiths said.
He said the ‘self-sustaining cycle’ posed a risk for UK exports, as well as the much needed return of empty containers to Asia, which could help lower the cost of UK imports. The scheme was expected to last at least until the end of the Lunar New Year in the middle of next month, but could continue until the second quarter of this year.
A spokesperson for Felixstowe, Britain’s largest container port, declined to comment.