Another Storm on the Horizon?

I’ve written to the trade press today to try to warn the market of yet another storm looming on the horizon. There was some coverage of it on the BBC news website over the weekend, but beyond that, it doesn’t seem to have been picked up very widely.

As you’ll appreciate, even without the Coronavirus pandemic, this is peak season for importing freight from Asia. Black Friday, Thanksgiving and Christmas combine to drive a huge spike in demand, and logistics businesses across the west also ramp up their orders to cover Chinese New Year shutdowns. This year though, the spike is even bigger than normal because orders which would normally have been placed during lockdown have been pushed back into the Autumn and Winter.

As a result, the logistics industry is under immense strain and real problems are starting to emerge. Worldwide demand is now at such a level that we are seeing massive cuts in air, rail and sea freight capacity, resulting in delays and surging prices.

Our logistics partners and our sourcing office in China both tell us that market rates for sea freight have shot up in recent weeks as competition has increased for space on containers. At the same time, many carriers are avoiding the UK altogether or have introduced a UK Port Congestion Surcharge because of the operational difficulties and slow turn around at UK ports – particularly Felixstowe. And this, of course, is before we even start to factor in any impact a no-deal Brexit might have.

I don’t want to be the bringer of bad news, but this is a problem for every business which imports directly or relies on goods imported into the UK.

At Mila, we’re obviously doing all we can to secure sufficient space for the huge orders we have on the way from our Chinese suppliers, who themselves have pulled out all the stops to ramp up their volumes for us over recent months. But, along with every other major UK hardware supplier, we find ourselves having to pay double, treble or even quadruple the cost for that space if we want to bring those orders in on time.

One logistics company has described the situation in Asia as ‘Total Meltdown’ and it seems likely that we will see prices in the UK have to rise if we are to have any chance of restoring product availability to normal levels early in 2021.

I’m not scaremongering and I can assure Mila customers that we are very much ahead of the game when it comes to securing the freight capacity we need from what is available. However, I do think it’s sensible to warn customers now of what might lie ahead so that they can start to factor in yet another unforeseen consequence of this pandemic.

 

Richard

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