British businesses which sell and transport imported goods are facing spiralling costs of thousands of pounds and delays to their shipments as global problems continue to affect Britain’s biggest container port.
It comes after This is Money first revealed problems at the port in September, with companies reporting of delays receiving containers.
A surge in global demand for goods amid the coronavirus pandemic coupled with not enough ships, delays and a backlog of containers at Felixstowe, Suffolk, has led to some of the world’s largest shipping lines imposing three-figure surcharges on containers imported into the UK.
James Hardy, director of operations at Essex-headquartered Mannson Freight Services, told This is Money the global shipping trade had ‘collapsed’ in the face of the pandemic, but demand was now at ‘150 per cent of capacity’ due to a scramble to import goods and a shortage of containers.
Businesses which import goods through Felixstowe are facing mounting costs as the global shipping industry buckles under delays at ports and a surge in demand for containers
Surcharges and higher shipping costs imposed by some of the world’s largest shipping lines have fed through into higher costs for businesses, and potentially consumers.
One family-run business in the South East which sells imported goods to retailers is facing a $1,750 (£1,321) charge for each container they bring in due to the problems at Felixstowe, with its logistics firm saying it was a temporary ‘peak’ charge, but didn’t make it clear when this may end.
Meanwhile a distributor situated in the same town as the port said increased costs for importers would ‘obviously affect the costs of goods going to retail.’
Mr Hardy added some businesses he forwarded goods to ‘could shut up shop’ in the face of higher shipping costs as logistics firms passed on their own increased charges.
One customer of his, which imported parts to fit out minibuses, faced a £2,500 higher bill, which they could not afford to pay, as forwarding firms and hauliers sought to cover increased charges imposed by shipping companies.
‘Customers will have to pay more for their goods and clients will face higher costs’, he told This is Money, estimating that the cost of shipping one 40-foot container could rise from £2,100 in October to more than £7,500 by December.
Zoe McLernon, policy manager at Logistics UK, the trade body which represents businesses which rely on and provide logistics services, told This is Money: ‘We are maintaining close contact with Felixstowe to monitor the issues occurring as a result of the delays there, and will continue to support our affected members until the situation is resolved.
‘It is vital that congestion at the port is eased as soon as possible.’
Asked how many of its members planned to pass higher import costs onto businesses and consumers, she said: ‘Logistics UK is not party to any commercial decisions made by individual member organisations.
‘As an industry, logistics already works on very low margins and cannot absorb the costs of delays which are not of their making.’
The Department for Transport has previously stated it is monitoring the situation but considers the matter a commercial one for the port for now.
The Port of Felixstowe was found by IHS Markit to be one of the worst-performing ports in Europe, with ships spending 8 hours unloading there compared to an average of its rivals
A port in a storm
The latest news of delays and higher costs worldwide comes in the same week that Felixstowe, which is a vital hub for small businesses across Britain, was named one of the worst-performing ports in Europe and Asia.
Container ships take around 32 hours to be loaded or unloaded at the docks, according to analysis from IHS Markit.
‘The slow turnaround on the port massively affects the throughput of cargo into our warehouse and at some points this year we have been working over a week behind’, the managing director of the Felixstowe-based distributor told This is Money.
As an industry, logistics already works on very low margins and cannot absorb the costs of delays which are not of their making.
Zoe McLernon – Logistics UK
Ships spend 24 hours on average at rival ports, the analysis found, while Felixstowe lags far behind fellow UK ports at Southampton and London, although they too are being hit with surcharges as the global shipping trade comes under severe strain due to the coronavirus and a shortage of containers and ships.
CMA CGM and Hapag-Lloyd, the world’s fourth and fifth-largest shipping lines, have both introduced per container surcharges on all UK imports, with Felixstowe the first to be hit by the former.
EV Cargo Global Forwarding, a Buckinghamshire logistics company, said ‘surging demand for cargo coupled with capacity constraints, equipment shortages and port and vessel delays, has brought about some of the most difficult conditions that the industry has seen in many years.
‘We now have a situation where demand is outstripping the vessels available, which in turn is fuelling a rapid series of rate increases and surcharges with the carriers.’
CMA CGM and Hapag-Lloyd, two of the world’s largest shipping lines, have imposed surcharges on imports to UK ports as delays mount for British businesses
They said they expected further surcharges to be introduced by shipping lines next month.
While problems at the port long predate the coronavirus, the pandemic has made them worse, with productivity hit by trying to make the port coronavirus secure and around 11,000 containers of PPE having been stored at the port since August.
However, these containers are at last beginning to be moved, according to the East Anglian Daily Times.
Surrey-based Unisto, which sells decorative and security seals and name badges, said a container due in mid-November would likely not arrive until the New Year after it had to be rerouted from Felixstowe to Southampton
‘Our container won’t arrive until the New Year’
This is Money has previously reported on the delays this has caused to small businesses across the UK struggling to get imported goods in on time during the busiest stocking up period of the year, with one online flooring seller in Leeds having to pay out thousands of pounds to customers whose orders were delayed.
Donald Miller, the sales and marketing director of Surrey company Unisto
Donald Miller, the sales and marketing director of Unisto, a company in Surrey which sells branded tags to companies like Diageo as well as security seals and name tags, is another facing problems.
He said a container of seals due to arrive from Malaysia in mid-November was ‘unlikely to reach us until the New Year’ as it had to be routed through Southampton, which too is facing a backlog as ‘our freight forwarders aren’t the only ones to have had that idea.’
While his business is not seasonal, many which rely on the port will be and will be anxious about their stock arriving in time for them to be able to sell it over the Christmas period.
UK importers were suffering from ‘horrific delays’ of as long as three to four weeks, James Hardy said, with shipments due a fortnight ago not set to arrive until December.
We have a container due in from Malaysia towards the end of November that would normally be routed through Felixstowe that is having to be diverted to Southampton. The container is unlikely to reach us until the New Year
Donald Miller – Unisto
In an update published on its website on 15 November the Port of Felixstowe, owned since 1994 by Hong Kong-headquartered and British Virgin Islands-incorporated Hutchison Ports, said ‘like other major container ports worldwide’ it was ‘still experiencing a spike in container volumes and dealing with the consequences of the ongoing coronavirus pandemic.’
It said the current backlog of containers ‘will last at least into December and possibly through into the New Year but we are working hard to minimise the impact on daily operations’.
Insisting that delays to importers were not solely down to the port itself, it added: ‘We continue to work closely with our customers and other stakeholders to tackle the impact of current global supply chain pressures on the flow of goods through UK ports.’
It insisted 95 per cent of containers were available for collection within 10 minutes of being unloaded from ships, and said it was recruiting 104 new drivers and engineers and would aim to clear the thousands of PPE containers ‘within four weeks’.
But companies which transport goods to and from the port were not as optimistic.
The managing director of the Felixstowe-based distributor who spoke to This is Money said: ‘I cannot begin to explain the stress and problems the port has caused us, our staff and our customers.
‘But we have nowhere to go. None of the bodies we are a member of have been able to make any progress with the port or shipping lines.’
He added: ‘It’s beyond a joke but one that we’ve just learnt to work around as best we can. It’s a lot like toothache, you become used to it if you can’t get it fixed.’
