The impact that the pandemic-driven global supply chain challenges, disruption and increased costs experienced since last year will have for consumers in 2021 has been bought into sharp focus by BBC News this week.
Continuing supply chain issues and the massive increases in the cost of shipping goods from Asia to the UK, Europe, The USA and, in fact, globally on most trade lanes, is creating a growing shortage of components for manufacturers and finished consumer products from home furnishings, bicycles and sports kit to children’s toys and garden furniture.
Scarcity of empty containers at key origins combined with continued (and increasing) demand for vessel space from China has quadrupled sea freight prices in the space of weeks, with costs hitting record highs as shippers compete to secure space on vessels. Some shipping lines even adopted the tactic of auctioning capacity to the highest bidder from China, further destabilising the market.
The European Sporting Goods Industry, whose members include Nike, Puma and Adidas, said delays were having a “huge impact”, while Halfords has reported gaps in its stock caused by shipping problems and mentioned freight costs and disruption in its latest trading update.
Trade body Bicycle Association said: “There’s been disruption, and the cost of securing containers is up to 10 times higher than a year ago.”
In a survey of 900 small and medium-sized companies, 77% reported experiencing supply chain difficulties in the past six months, which was in line with comments from the international shipping association Bimco, who said issues were predominantly “affecting the small importers and retailers rather than the Tescos, Walmarts and Ikeas of this world” which ship more cargo and tend to be prioritised by carriers.
But even the “Ikeas of this world” are not entirely secure, as the BBC’s “Garden furniture shortage no picnic for retailers” reports:
People hoping to spruce up their gardens, ready for when we can socialise in them again, may face problems with their seating plans due to a lack of outdoor furniture.
A combination of high demand and shipping problems is being blamed for the shortages.
Furniture giant Ikea is among the retailers experiencing supply issues.
The Leisure and Outdoor Furniture Association, which represents 70 manufacturers and wholesalers, said all of its members have problems with supply and are being charged anywhere between $7,000 and $10,000 to ship containers from China.
“Some have even been quoted up to $17,000 to bring one container over,” they told the BBC. All of which could have a knock-on effect on prices and availability for consumers.
Click HERE to read the BBC article in full.
We are aware of some importers that still have product/orders to ship from Asia due to load in the final quarter of 2020 and have still not been loaded (not Metro customers, may we add). In addition, some low-value product clients have been cancelling orders as they simply cannot sustain the shipping costs within their unit price and still return a profit, and they are looking at sourcing from regions closer to the UK and Europe.
More than ever, supply chains need to be resilient to withstand today’s challenges, which is why our award-winning MVT digital platform is invaluable in providing milestone/event management control, visibility and flexibility to protect our customers’ supply chains and identify and alert issues as soon as they occur so that corrective action and alternative solutions can be considered.
It is anticipated and widely reported by carriers, industry bodies and manufacturing organisations that the demand for freight will continue, and the challenges in the industry will remain for the rest of the year and possibly beyond. We will continually monitor and update you weekly with the latest developments in the logistics sector.
For further advice and information on current market developments and intelligence please contact Grant Liddell.