Freight News, Sea

Retailer calls for probe into shipping ‘cartel’

[ July 15, 2021   //   ]

The boss of a UK online retailer is calling for the Competition and Markets Authority to investigate the ‘cartel’ operated by container shipping lines. Nick Glynne, chief executive of online retailer of Buy it Direct Group, says that the cost of shipping large items internationally has increased sevenfold in a year, contributing to the recently reported sharp jump in inflation and making further price increases and product scarcity inevitable.
Nick Glynne, whose Buy it Direct Group sells white goods, electronics, and furniture though brands including Appliances Direct, Laptops Direct, Better Bathrooms and Furniture 123, said: “Demand for consumer goods has soared over the past 18 months with people unable to spend their money on travel and other activities, yet there has been a growing shortage of containers and shipping availability in that time.
“The self-perpetuating cycle has gotten out of control. Factories in China and the Far East don’t have any warehousing capacity, meaning they only produce what they can ship immediately. This, coupled with the reduced capacity in containers and ships, which are controlled by a small handful of global freight companies, has increased the cost of a container from circa £1,800 pre-Covid to more than £12,600 now.
“Consequently the freight cost, a key part of a product’s overall price, has increased enormously. For example, where the freight element for a single washing machine was £10 around 12 months ago, it is now more than £70 per item, cutting margins and pushing the price of products up for everyone .”
He added that retailers now have to decide whether to continue importing goods and hoping they can sell them at a higher price, or holding off and waiting for the shipping crisis to subside. Either way, this will mean that the prices of some large consumer goods will inevitably go up before the end of the year, while others will be increasingly hard to get hold of, Nick Glynne warned.
But he added: “It’s hard to avoid reaching the conclusion that the international shipping companies at the centre of this have deliberately reduced capacity over the past 12 months capitalise on the surge in demand. There are solutions available to the lines but it is clearly more profitable for them to fuel the scarcity and make greater profits on their current fleet.
“A quick look at the big five shipping companies’ share prices will tell you all you need to know about the problem, and should be an urgent matter for the Competition and Markets Authority.”
“Otherwise, we’ll be in a position for the foreseeable where goods are not being made and there’s no guarantee on when products will arrive. This is a problem for all retailers and other importers of large goods, and one that’s only going to get worse if it isn’t addressed.”