Forwarding, Freight News, Logistics, Sea

Soaring shipping costs are killing trade, warns Scots freight boss – updated

[ August 25, 2021   //   ]

Surging container rates from the Far East are in danger of killing off trade in many commodities, warns David McCutcheon, chief executive of Scottish forwarding and logistics company, Bullet Express. With freight charges having increased four-fold in a short space of time, many retailers, especially those selling bulky goods, have halted have ceased sales of many lines.

He told FBJ: “Many of our customers, when they’re faced with these rates, are saying: ‘Just don’t send it – we can’t sell it at that price’. For goods like garden furniture, where you can fit only a few items in a container, it’s a real quandary.”

For the bulkier categories of goods, shipping costs had increased from 15-20% of the total delivered cost to around 65%, he added.

Bullet Express operates domestic pallet deliveries on behalf of the Pall-Ex network as well as offering ocean freight services. David McCutcheon explained: “We have had to deal with rising costs for pallet deliveries too, but there we’ve been able to sit down with customers and nine times out of ten they’ve been very understanding. But containers are a whole different ball-game – they’ve suddenly gone up four times, and we don’t really have an answer for our customers as to why.”

Shippers tend to blame forwarders for the increases, but shipping lines have not been forthcoming with an explanation as to why rates have increased so much, said David McCutcheon.

It was even more galling to see container shipping line profits soaring, with many operators profits in the past quarter equalling those of the past ten years.

At the same time, voyage times and reliability has dropped. Indeed, the longer transit times are a source of difficulties for shippers who have to finance the cost of goods on the water for perhaps days compared with 40 previously.

Ian Mallon at Cheshire-based Neon Freight described some lines’ operations as “completely imploding – we’re waiting seven days now for a merchant haulage release, adding: “They say to us on email: ‘We will reply in 48 hours, but then they don’t do anything and you have to chase them again. Then they have the temerity to moan about receiving 18 emails from us, chasing the release on a container.”

But he had had a release from Hapag Lloyd in about one hour: “So it can be done.”

Shipping lines were also unable to offer haulage but were not making it easy for forwarders to do their own.

He also reported an instance of at least one shipping line ceasing to allow empties back on quay at extremely late notice.

Ian Mallon suggested that the problem was the high numbers of people still working from home instead of treating shipping and land transport as an “essential service” with more people working from offices.

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