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LOFA Warns That Freight Problems Are Escalating

KatarzynaBialasiewicz evening-on-a-terrace-picture-id1186690832

LOFA (Leisure and Outdoor Furniture Association) reports that there is yet another increase in freight rates being levied on our industry. 

Shipping rates from Asia to North Europe are now edging towards $20,000 per 40ft container, “This represents a massive 1566% increase in the space of 19 months”.

"These increases will have a major impact on importers, retailers and consumers.

"Retailers will not be able to sell stock if the retail prices have to be increased.  Importers will find themselves trapped, having to pay 16 times more for freight than last year.  It would not be unlikely to expect some companies to flounder in 2022 if this situation is not resolved."

Importers have tried to absorb these costs where they can, but this will no longer be possible with such a massive increase.   LOFA says that an importer shipping 50 containers a year could face increased costs of almost $1m.

LOFA says the whole market is in bedlam

  • Finding empty containers is exceedingly difficult. 
  • Factories are producing product but are running out of storage space because there are no free containers.
  • A new outbreak of Covid is affecting the southern China ports where there were reported to be up to 40 vessels waiting to berth last week.  
  • The availability of containers at these southern Chinese ports continues to deteriorate as carriers omit calls due to a wave of Covid outbreaks in the Guangzhou province.  According to the latest data from Container xChange, the ports of Yantian, Shekou and Nansha have been the worst hit by the container shortages.
  • There are far fewer empty containers arriving back to southern China as container lines skip calls, and many shippers face long delays or higher prices for equipment if these affected ports can’t be avoided. 
  • There are 5 million containers currently in the wrong position in the world and 40% fewer vessels for June as a result of the Suez Canal issues. 
  • When products eventually arrive in the UK there is now an issue with moving goods that have docked and cleared from the quay as inland haulage rates have reached new and unexpected heights.  

Are shipping lines colluding to increase prices?

LOFA asks, “Is it the shipping lines that have colluded together and seized this opportunity to increase prices whilst the demand is strong and are now reaping the benefits for no other reason than they can? 

“Distributors, retailers and consumers are now all paying for this short-term profit gain.  In real terms has Brexit, Covid and the high demand helped them to get away with their greed, and are they in effect operating as a cartel? Is there too much control in the hands of the shipping lines?

"In light of these ongoing difficulties LOFA has lobbied the Department of International Trade, the Home Office, local government and have also reported this price fixing by the larger freight firms to the Competition and Markets Authority."

Source : Reproduced with permission from George Bullivant at Gardenforum

Image : KatarzynaBialasiewicz / 1186690832

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24 June 2021

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