Entrepreneurs affected by the ripples of shipping “super-inflation”
UK entrepreneurs are suffering from the ripple effect of a shortage of global shipping capacity.
Shipping costs from Asia to the UK climbed 500% between June 2020 and June 2021, according to Philip Damas, head of supply chain advisers at Drewry Shipping Consultants. “We are starting to see overinflation in transport costs fueling inflation in construction and other goods,” Damascus said.
Civil Engineering Contractors Association (CECA) Northeast Director Stuart Miller said members of the organization are feeling the “ripple effects” of rising shipping prices.
âRising prices and material shortages are now a critical business issue that is jeopardizing the recovery of the entire construction industry,â he said. “The ripple effects could cause delays in project schedules, but price increases could have a detrimental effect on any entrepreneur who is locked into a fixed price deal, especially for a long time.”
In early 2020, there were massive delays at commercial ports due to the impact of the pandemic on imports, factory closures, the introduction of COVID-19 security measures and the aftermath of Brexit .
It was reported that the unloading time had quadrupled from one week to four weeks. A shortage in the supply of shipping containers has also contributed to the industry’s material shortage. Imported items such as wood, steel, and electrical items are particularly affected by shipping costs and availability.
ING’s senior economist for international trade, Joanna Konings, said congestion in the shipping system, the rush on container capacity to meet new orders and replenish stocks, and the port’s poor performance with most ships missing their scheduled arrival times drove up prices.
âThere is just no slack in the system to catch things up,â she added.
Damascus said a return to normal operations is not yet on the horizon.
“It is possible that the current crisis will even last until a large number of ships currently under construction join the shipping market in 2023,” he said. âIt will take several months for the shipping and port sectors to address current inefficiencies, congestion and delays and to deploy additional infrastructure capacity. “
Along with international delivery issues, suppliers are struggling to transport materials to the UK due to a shortage of truck drivers.