Shipping freight rates to hit new high, expect increased product shortages retailers warned
UK retail can expect yet more product shortages and face higher costs in the coming months. The grim news came as several reports over the weekend pointed to retailers facing tougher conditions in the run-up to the important Christmas trading period.
The Telegraph reported trade experts also warning the supply chain disruptions that threaten to stifle the post-Covid recovery will also spill over into 2022 as freight rates soar.
Supply chain disruptions have already been driven by strong post-lockdown demand and disruptions to supply, such as closures of ports and factories in Asia due to Covid.
A report from UBS warns container freight rates between China and the US and Europe could leapt tenfold, compared to 2019. This follows the closure of the China’s Ningbo, the world’s third busiest port.
This comes as global shipping costs have soared to record highs after an August price surge fuelled by the firms scrambling to combat severe supply shortages as port and factory shutdowns, reports the Telegraph newspaper.
Meanwhile, the Harper Petersen gauge tracking rates on container ships has jumped 8% in August to a record high with the index more than tripling in 2021.
Also, the closely watched Baltic Dry Index (BDI) is up almost 30% in August to the highest level since mid-2010. The BDI measures prices paid for transporting raw materials across the world.
The newspaper reported economist Edward Teather warning that disruption is “likely to last into 2022” and is the result of stimulus-boosted consumer demand and a shift in household spending to goods.
He said: “This unexpected jump in demand overwhelmed port capacity. In addition, Covid cases among crew have curtailed container ship capacity. The temporary Chinese port closures come on top of that”.
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