Container port congestion could lead to price rises

A rebound in demand for consumer goods around the world has led to multiple delays at container ports. Freight rates have risen from 12 to 25 per cent, and these cost increases may eventually reach the consumer.

“The situation does not affect Cyprus directly, and our container port is not seeing delays,” said Captain Eugen Adami, CEO of Mastermind ShipManagement in Limassol. “However, Europe and the UK are affected and goods coming in from there could see delays in arrival and higher prices.”

A shortage of container ships is also contributing to delays and higher freight rates, Adami added. “Renewals being made now are seeing higher prices, while those who contracted for cargoes a few months ago aren’t getting the benefit. But many shipping firms are taking in windfall earnings.”

“The sharp rise in rates is being driven by high demand for a wide range of Asian-manufactured goods in the US, where inventories are now at their lowest levels since 1990 as a result of shocks to supply chains earlier in the year,” David Kerstens, an analyst at Jefferies, told the Financial Times.

The usual Christmas rush is part of the problem, shipping researcher Alphaliner said. But that increase has been augmented by rising consumer demand, following on depressed demand during the lockdown months.

Otto Schacht, EVP sea logistics at Kuehne + Nagel, pointed out there were 15 vessels anchored outside LA-Long Beach in the last week of November waiting for a berth.

This week, the BBC reported, two major cargo shipping companies, Maersk and MSC, said that the port of Felixstowe was backed up with long delays.

“The UK’s ports are currently broken,” one freight director said, and one freight director said the UK’s ports are currently “broken” as the surge in demand for consumer goods has caused bottlenecks all around the country.

In November, Hapag-Lloyd announced a peak season surcharge for China-to-intra-Asia cargo of $500 and $1,000 per twenty foot equivalent and forty foot equivalent respectively (carrier volumes) effective throughout December, according to The Loadstar. “This surcharge gives us the chance to continuously offer you the service quality you are used to,” the company said.

One electronics firm said that the cost of bringing goods from Asia to the UK had quadrupled, gone from $2,000 to $8,000. Obviously, the firm plans to pass that on to the consumer.

The Japanese carmaker Honda on December 9 said delays at UK ports are holding up imports of parts and has had to cease production at its factory at Swinden, Autocar said. Like most manufacturers, Honda operates with just-in-time parts demand, so only when a part is almost out of supply are more brought in. These delays are costly to the carmaker.
Source: Cyprus Mail

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