THE GLOBAL SHIPPING CRISIS

The world is continuing to face unprecedented challenges and whether we like it or not, if it hasn’t already done so, it is going to have an effect on our businesses in one form or another. There are too many factors to cover off on in this brief summary but there is quite a good article that helps explain the current struggles from a freight forwarders perspective if you click this link: https://bit.ly/3ky1tgt

For those who don’t have the time to read the link above, here are the majors: 

Shipping Issues

• Due to the original outbreak of COVID the shipping lines who had been struggling for years and in fact downsized their fleets, quickly became over stretched when economies began to bounce back.  
• We all know the chaos that played out, but the world decided to borrow big to support their flailing countries.
• America pumped 2 trillion into their economy. 
• American Demand for Chinese product increased by 40%. 
• The freight cost of a 20-foot container is currently increasing by $300 to $500 USD every 14 days. 
• Australians are paying somewhere around $8,000.00 to $9,000.00 per 40ft container in freight. That’s a 375% increase over this time in 2019.
• The Americans are now paying as high as $25,000.00 USD. 
• If you were a ship owner, where would you be sending your ships?  

The price America is paying is putting Australia way down the list as a freight destination. 

• With increased demand, there are not enough ships and although there is now a large increase of new ships on order, the average build time of a container ship is three years. 

Port Closures

• With localised outbreaks of the Delta strain causing snap lockdowns in major Chinese ports, further backlog of products tied up is increasing. 

Raw Material Shortages and increased costs  

• The lack of product deliveries extending delivery times is causing companies to increase their orders to ensure supply which in turn is lifting demand.  
• The additional demand is placing more pressure on raw materials as manufacturers purchase more to satisfy increased orders. 
• The cost of the raw materials is increasing due to massive demand.  

Today Taipan, even since the last round of manufacturer increases, have received two new price increase letters, one as high as 6.8% and this is not allowing for any increases in freight costs.

This email is not a price increase letter. It is to inform you of the current situation and keep you up to date so there are no nasty surprises.

We have so much product on order it’s not funny and we want to have it all at the branches as much as you do, and as far as price goes we will absorb as much as we can for as long as we can.

To sum up, the experts are saying there is at least another 12 months of disruption before things begin to settle back down to some form of normality.