Trade association asks CMA to intervene in shipping crisis

Responding to the spiralling costs associated with global shipping, the British Home Enhancement Trade Association (BHETA) is spearheading a campaign to secure intervention from the Competition & Markets Authority (CMA).

One factor prompting a wave of price increases across the trade, the costs to acquire container space have risen by as much as ten-fold for certain high-demand shipping avenues.

A BHETA member survey confirmed that suppliers who import either product, components or raw materials are currently facing exorbitant charges in relation to freight costs which are having a serious and detrimental impact on their businesses.

Many companies are also being charged additional costs such as increased demurrage and cancellation charges on top of the increased costs from importers and freight forwarders. This issue is compounded by lack of supply of containers and availability of freight space. The general feeling now from suppliers, freight transport companies and the industry in general, is that these increased costs are set to remain in place at least through to 2022.

The cost of a 40ft container from the Far East has increased from around $2,250 to $18,900 in the past year, in many cases exceeding the value of the goods being shipped, making it unprofitable to import without passing on significant price increases to UK consumers. On certain lower-priced lines sales in any form become entirely unfeasible.

BHETA’s campaign lobbies on behalf of DIY, housewares, small domestic electricals, gift and garden suppliers. Chief Operating Officer of BHETA Will Jones commented on why he felt the CMA should step in, stating: “Suppliers will only be able to absorb a certain percentage of these increased costs, resulting in higher costs for the end consumer. Many smaller suppliers will not be as successful in passing increases onto the trade and this will result in the supplier base reducing or consolidating, which will impact on competition, employment and ultimately the whole economy.

“Speaking frankly, an investigation needs to determine if shipping companies are profiteering from the Covid pandemic, and if shipping companies are controlling supply and demand to raise prices.

“With non-essential stores now reopened in the UK, there are additional demands on stock and a bottleneck in supply caused by shipping companies is the last thing the UK economy needs at such a sensitive time as we emerge from lockdown. This issue will cause significant gaps on shelves, company closures, drive huge inflationary pressures, massively reduce profits and therefore corporation tax, and cause a real shock to national economic wellbeing as well as to individual consumers.”

Jones added: “This is not only an issue for suppliers, but for everyone. BHETA is urging all members affected by this to write to their local MP; and join with the BHETA campaign.”

To find out more about the freight campaign to involve the CMA, contact the BHETA Member Services Team on 0121 237 1130, or alternatively, email Zara Miah on zm@bheta.co.uk.

This story originally featured on our sister site, Torque.