Shipping costs surge as port delays continue

Businesses which import and export goods are facing rising costs as a result of global pressures on shipping demand that have caused major delays at the UK’s largest container port at Felixstowe, Suffolk.

The port’s owner has warned of further delays, leading to concerns over shortages as stockpiling of goods such as PPE and post-Brexit orders have caused major backlogs. In a statement on its website, Hutchison Ports warned that delays caused by high volumes would continue “at least into December and possibly into the New Year”, causing potential headaches for businesses currently waiting on Christmas stock.

Reports suggest that over 11,000 containers of PPE purchased as part of the government’s COVID-19 response remain at the port and have been on site since August, although Hutchison said it expects this to be cleared within the next four weeks.

A surge in global demand for goods amid the coronavirus pandemic coupled with not enough ships, delays and a backlog of containers at Felixstowe -- which handles approximately 40% of all the containers coming into and out of the UK -- has led to some of the world’s largest shipping lines imposing three-figure surcharges on containers imported into the UK. In response to the congestion, some shipping companies have increased their freight charges by as much as 300%, leading to concerns that importers and exporters will be forced to pass on these charges to their customers.

Demand for shipping has been further increased by the reduced number of passenger flights during the pandemic, many of which would also carry freight cargo. This has had an impact on ports around the world, many of which are also seeing similar delays in handling freight.

The British International Freight Association has urged governments to step in to prevent unreasonable surcharges in ocean freight linked to congestion in ports around the world. Robert Keen, director general of BIFA, said that freight forwarders and the shippers they work for “should not be penalised by demurrage and detention practices when circumstances are such that they cannot retrieve containers from, or return containers to, marine terminals”.

“Governments must have greater scrutiny over demurrage and detention practices to ensure that they are considerate and reasonable for the good of their own economies. It is crucial to ensure fluidity and good function of the supply chain, in unprecedented times as illustrated by COVID-19 and the chaotic state of international container shipping at present.”

Image courtesy of the BSI

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