Imported goods set for inflation as shipping prices soar

import freight costs soar supply chain
Share this article

The head of a large UK logistics and maritime services group has warned that unsustainable shipping costs are set to filter down the supply chain throughout the end of 2021 – unless the government intervenes.

 

Imported goods face a sizeable increase in price in the coming months, with the impact of unsustainable shipping costs set to filter down through supply chains, according to Peter Wilson, MD of Cory Brothers.

Wilson told Lloyd’s Loading List that significant inflation in goods prices is inevitable now that current levels of shipping costs exceed the value of the goods inside the boxes. With the cost of shipping a 40ft container from China to the UK having risen rapidly from $9,000 last year to $19,000 this summer, he explained that importers are now making losses on goods imports at the current prices. Some of this inflationary cost has not yet filtered down through the supply chain, Wilson detailed, adding that importers may have already committed for several months to certain price levels for their products. When those prices do come up for review, a product that may cost £150 currently may see its price increase to £250, he noted.

Unless politicians or regulators can make any significant progress on regulating freight rates being charged by container lines, Wilson believes it is inevitable that there will be significant inflationary price rises as the year progresses. Warnings he made to the UK government last November about the implications for importers have proven correct, and he sees every reason to believe this will prove to be the case again.

“The discussion back then in November was that lines would not let container freight rates go above $10,000,” he said. “Now we’re talking about $20,000.”

Despite all these issues, demand has remained strong. Wilson believes, however, that this cannot be sustained long term, and that consumers will need to get used to higher prices of imported products.


Share this article