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Increase in shipping costs

Over the past two months, we have seen significant cost increases across all forms of transport, particularly container shipping costs from The Far East to Europe.

Our understanding from our shipping partners is that the overall cost increases are being driven by two main elements, an increase in underlying container base rates, and the addition of surcharges relating to peak season and port congestion.

Container base rates are increasing because of a combination of very strong cargo demand in Asia and an increasing shortage of containers, this shortage is expected to last until the end of February 2021 at the earliest. Normal surcharges introduced around periods of seasonal demand have increased significantly over the past 2 months and an additional congestion charge has been introduced to cover the delays caused as a result of increased traffic due to COVID-19, Brexit preparations and too many empty containers in port.

As an indication of the increase in costs current FAK (Freight All Kinds) container rates being quoted to us range from between 60% and 80% higher than in September 2020.

To date, we have worked hard to absorb the increased costs and shield our customers and partners from the impact but as the current high costs are set to continue for a period of months we have no option but to reflect these in our pricing. It is very difficult to estimate how long this disruption will last given the scale and complexity of the imbalance in container locations. Some are predicting the pricing will remain very high through the Chinese New Year, taking us towards the end of February before we see a decline.

We are closely monitoring the situation, consistently looking for the best value and seeking ways to minimise additional costs and will look to adjust pricing as the market moves in 2021.

Please do get in touch if you have any questions or concerns about how your supply chain will be impacted here. 

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