More and more entrepreneurs are suffering due to the dramatically increased container-shipping costs. It is primarily a result of the Covid crisis, although other elements are also at play.
Tenfold increase
Today, Belgian companies pay up to ten times more for shipping a sea container with goods from China than before. “Where we used to pay 1,800 to 2,200 dollars to ship a 40-foot container, it now sometimes costs up to 24,000 dollars”, Nikolas Van der Veken of Fitnessking confirms in Belgian newspaper De Standaard. The main result is that profit margins are coming under tremendous pressure.
In addition to the price increase, the entrepreneurs face additional difficulties: many shipping containers are delayed and arrive several weeks later than scheduled. “We hardly have any desk lamps left, and the Christmas articles are in danger of arriving too late”, Jens Govaert from Molecule adds. They are no exceptions: delays and soaring prices are heavily disrupting the supply lines of just about all products shipped by container.
Covid
Transport economist Thierry Vanelslander points to the Covid pandemic as the primary cause. “After the lockdowns brought factories and ports worldwide to a standstill, there was a double catching up to do. New orders and already ordered products had to go out at the same time, and many companies also wanted to build up additional stock.” In short, there is a substantial demand for goods, but only a limited number of shipping containers and ships.
Moreover, the ports cannot keep up, especially since some important Asian ports have already been temporarily shut down because of new Covid outbreaks. And there is also the blockage of the Suez Canal by stranded container ship Ever Given: even though that is already several months ago, experts say that the consequences of that event are still being felt. The busy canal was blocked for days back in March, causing a traffic jam of hundreds of ships.
Higher retail prices
Obviously, the high container-shipping costs are weighing on the economic recovery. “If you ship a container full of diamonds, then the price increase is not a problem. But garden furniture sets, for example, take up a lot of space, and the transportation costs weigh heavily. If they rise any further, it will no longer be feasible”, says Govaert.
When will the tide turn? As long as the coronavirus pandemic is not under control, freight transport by sea will remain disrupted, Vanelslander believes. The shipping companies are becoming the focus of critical eyes: the industry is dominated by just a handful of players who operate worldwide. That is why they are currently in a position where they can charge high prices.
