Rising Container Costs

There is currently an extraordinary level of pent up demand for all types of products from China and the Far East to the US and Europe. In addition, there is also a chronic lack of carrier capacity, primarily due to a shortage of empty containers in China, arising from a large build-up of container equipment in the West. Allied to this many shipping companies have reduced sailings and container allocations to the UK and Northern Europe in order to bolster short term profits.

As the below chart shows, this severe capacity issue has seen a rapid escalation in carrier prices, as shipping lines have withdrawn fixed price and long term agreements, relying wholly on freight rates with large surcharges negotiated on the spot market.

How long will this problem last?

It is expected that freight prices will remain high for most of the first quarter 2021 and possibly into the second.

What are the implications?

Many products in common cleaning and hygiene use originate in part or in whole in the Far East. This includes janitorial equipment (mops, buckets and so on) and notably PPE (gloves, aprons, and so on). Some suppliers have already advised that there may be both short term shortages and surcharge price increases on selected lines.

What are we doing?

The current situation remains fluid and we are working with our suppliers to ensure that we mitigate to the fullest extent possible any price rises. We will speak directly to customers where this problem may impact upon them materially and seek appropriate solutions.