PH FFT Freight debate_GF.qxp_Grid 02/08/2021 15:08 Page 1
Food for thought
Housewares is among the many industries that are being hit by soaring shipping costs and delays on Asia-Europe shopping routes. PH features news and views on this global challenge from several leading suppliers and a retailer. What’s the impact and what can be done in mitigation? Inset: Freight ship photo by Martin Damboldt.
Freight debate
Loading and unloading delays Eddingtons’ commercial director Richard Walker reports: “These are very challenging times with regards to freight and supply. Many Chinese factories are struggling to obtain adequate raw materials and have been overwhelmed with demand as they come out of lockdown. Sometimes they are working with Covid restricted work practices or have been unable to redeploy their workers which in turn impacts output. We will have all seen in the press the recent Suez Canal blockage; we had containers on the vessel the Ever Given but we were fortunate to have had adequate stock to cover the delay caused by the container. However, this helps illustrate the current challenges. The more recent temporary closure of Yantian port, the largest loading point in China, has compounded existing local Covid-related delays meaning this has simply added to a backlog in the region. In early July it was still only operating at 85% capacity. We’ve seen record levels on container prices in July, with forwarders competing for limited space with the shipping lines which remain swamped with demand. Vessels are ‘cutting and running’ from UK ports too where unloading delays mean it is not always viable for ships to wait for the backlog of unloading to clear – they head to dock at Rotterdam or Hamburg
with containers rolling back over to the UK by road at additional cost to us. UK port clearance and unloading delays are also contributing to demurrage charges on stock we desperately need. This is, of course, not just affecting our sector, and I’m sure will lead to inflationary rises throughout the economy. There is no sign of rates abating this year. Eddingtons has been managing the
unprecedented manufacturing costs by making shipments as efficiently as possible - often increasing quantities to fully utilise containers. We are blessed with a high geographical spread of brand partners and factory production sites, so we are not totally governed by what is happening in China. We source many products from Europe, which travel to us by road with shorter lead times and many of our brand principles are in the US where freight rates have been less badly impacted.”
Freight exceeds product cost Steve Galbraith, group buying and supply chain director, RKW acknowledges: “Market data indicated that after Chinese New Year shipping costs would slowly reduce back to pre-Covid levels. However, rates from China to the UK are now almost 10 times the normal ocean freight vs the same period in 2020. This has significantly increased the cost of products in general and, in many cases, the cost of freight per unit is now greater than the cost of the product. Our team continues to work closely with our longstanding factory partners and forwarders to minimise the increases, but we (as an industry) need to recognise that the main price driven influences are out of our control. Research shows consumers are willing to pay more when both the brand and product meet or exceeds their expectations. Offering consumers exceptional quality, aspirational products at unbeatable value stands at the heart of everything we do. By focusing on this ethos, we have continued to re-invest back into our business by increasing the amount of new product development so consumers are presented with new, innovative, and design led products that delight and inspire.” Left: The cost of containers has rocketed.
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