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Port problems and stockpiling surge costs British businesses thousands in costs

British ports under pressure from Brexit and coronavirus-fuelled stockpiling surges have caused UK businesses to face vastly higher container shipping costs than those on the continent, new data suggests.

Figures from the logistics company Freightos found problems affecting some of the nation’s busiest ports has meant the average cost of shipping a 40-foot container rose as much as 380 per cent between last October and mid-February.

Containers shipped from Shanghai to Felixstowe, Britain’s busiest container port, cost just under $11,000 on average at the peak, up from just over $2,000 last October. 

The cost of shipping to the port of Southampton rose by a similar amount.

The cost of shipping to the UK has increased since last October and British importers are paying far more than their continental counterparts

By contrast, the average cost of shipping a container from Asia to Northern Europe rose by a lower but still sizeable 268 per cent, peaking at around $8,455 in mid-February.

Freightos said UK importers had been particularly badly affected as they rushed to get shipments in ahead of the end of the Brexit transition period on 31 December, on top of a demand for goods and shortage of containers during the pandemic.

British businesses have also been hit harder by congestion and other problems facing the nation’s ports, with Felixstowe in particular having faced significant problems. 

This is Money first reported on the problems facing the Suffolk port, which accounts for nearly half of UK imports, last September.

Meanwhile, some shipping lines opted to reroute containers to Southampton due to delays at Felixstowe, causing costs to rise there too.

Ports have previously been blocked by containers filled with personal protective equipment imported by the Government, and have faced a double-whammy of staff shortages and an unprecedented increase in orders.

One Essex-based freight forwarder, who acts as a middleman between shipping lines and import businesses, told This is Money that the data ‘just shows you what we’ve all been saying.

‘The UK is some $2,000 more expensive than mainland Europe because ports there are running with less demand and delays so it’s cheaper’, he said.

The Port of Felixstowe was found by IHS Markit to be one of the worst-performing ports in Europe, with ships spending 8 hours unloading there compared to an average of its rivals

The Port of Felixstowe was found by IHS Markit to be one of the worst-performing ports in Europe, with ships spending 8 hours unloading there compared to an average of its rivals

Figures from IHS Markit released last year named Felixstowe as one of the worst-performing ports in Europe and Asia, with ships being unloaded over a period of 32 hours on average. 

Some other UK ports took close to 10 hours less, while the average among 12 comparable ports was 24.

As a result, some of the world’s largest shipping lines imposed surcharges on containers shipped to the likes of Felixstowe last year.

In the latest update posted on its website on 6 April, the port said 95 per cent of containers were available for collection within 10 minutes of unloading, and the turnaround time for hauliers was around 30 – 40 minutes on average. 

Some 77% of small businesses surveyed by the logistics firm Freightos said they had been hit by supply chain issues as a result of the pandemic. 34% have put up prices

The Port of Felixstowe was found by IHS Markit to be one of the worst-performing ports in Europe, with ships spending 8 hours unloading there compared to an average of its rivals

A spokesperson for DP World, which runs Southampton’s container terminal, said: ‘When our teams at Southampton have dealt with additional traffic over the past year, they have worked tirelessly to ensure that our operations remain within normal parameters so our customers’ goods reach their ultimate destinations in good time.

‘DP World Southampton is Britain’s second largest container terminal because of our long history of reliability and maintaining high service standards for our customers.’

The spiralling shipping costs and delays at ports have meant some businesses, many of which are actually enjoying a boom in sales, have faced rising costs of their own. 

The manager of a Leeds-based flooring seller which enjoyed a record year of sales told This is Money in February that the hike in container charges from major shipping lines was ‘insane’.

James Langton, 39, said he had been invoiced nearly $16,000 for one container from China, and higher import costs were costing the business around £1.50 more per square metre of imported material.

James Langton, general manager of Leeds-based Luxury Flooring. The company has enjoyed a record year of sales

James Langton, general manager of Leeds-based Luxury Flooring. The company has enjoyed a record year of sales

He told us: ‘Prices have been rising since Christmas and every time we think they can’t get any higher. We can’t sustain $16,000 per container ad infinitum or without passing costs on. It’s no way to grow a business.’

Logistics firms and sellers alike had hoped for a ‘slack season’ after Chinese New Year, which would see a manufacturing backlog eased, empty containers returned to the Far East and shipping costs fall.

But while Freightos’s figures suggested rates had plateaued in February and had begun to fall after Chinese New Year in late-February, some analysts said they had not fallen by as much as had been hoped.

‘We saw the rates peak in the run up to Chinese New Year with levels of up to $15,000, and it is true that we did see a plateauing and even slight decrease following this, although the decrease was not to the extent the industry anticipated it to be, which would have been down to around $9,000’, the logistics firm Woodland Group said.

Helen White, founder of House.com, which imports lighting manufactured in China, told This is Money her shipping costs had declined more slowly than had been hoped and first thought.

‘We are being quoted for about $8,200 in March which is much better but still four times the amount we paid in November’, she said.

And for some other businesses, the increases have yet to stop. Ben Charlton, business manager at Hanson Natural Stone, which sells stone for paving, driveways and walls to households and tradesmen said there was ‘no sign of prices falling anytime soon’.

Paving importer Ben Charlton said his Mansfield-based business was facing the highest import costs in its history

Paving importer Ben Charlton said his Mansfield-based business was facing the highest import costs in its history

Container costs for the business, based in Mansfield, Nottinghamshire, had risen from $1,750 in 2019 to $3,600 last month, and were continuing to spiral in the first fortnight of April, he said.

He added the company had ‘covered the costs of that to provide the affordable luxury we promise our customers’ but warned keeping prices low ‘won’t last long with the increases we are seeing’.

Meanwhile delays at Felixstowe, where the business primarily imports, also cost it money in the form of refunds and loss of sales ‘due to promised arrivals not being met’.

He said: ‘We have an extremely unreliable system. When I first started in this industry nine out of 10 times if a ship stated a date of arrival we could pretty much count on this, now with UK port delays the ships regularly arrive well past the stated estimated time of arrival.’

And any potential improvement in the situation may also have been hit by the six-day blockage of the Suez Canal by the 400m long container ship Ever Given. The blockage prevented billions of dollars’ worth of goods passing through one of the world’s busiest trade routes.

The 400m long Ever Given blocked the Suez Canal for 6 days in March

The 400m long Ever Given blocked the Suez Canal for 6 days in March 

Although it has yet to register on average container rates, Woodland Group said at the end of last month it had led to delays in arrivals to UK and European ports and to congestion in ports in China.

It said it would ‘impact the industry for months to come’ and ‘result in further congestion and a lack of containers’ which would likely result in higher shipping costs from mid-April. 

Felixstowe said it expected to be ‘very busy’ due to a build up of delayed vessels. 

‘It is thought that we won’t get back to normal rates this year, which could be difficult for many retailers’, Helen White told This is Money.

‘We do seem to be battered by problem after problem at the moment. With Brexit, the Ever Given and coronavirus it has been a bad year for the shipping lanes.’

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