Out-of-Control Shipping Costs Fire Up Prices From Coffee to Toys

The rising cost of transporting items around the world may affect your wallet sooner than you think, from your daily cup of coffee to the toys you were planning to purchase your kids.

According to Drewry Shipping, shipping a 40-foot steel container of freight by sea from Shanghai to Rotterdam currently costs a record $10,522, up 547 percent from the seasonal average for the prior five years. Freight-cost hikes threaten to raise the price of everything from toys, furniture, and vehicle parts to coffee, sugar, and anchovies, adding to fears in global markets already bracing for rapid inflation.

In an interview, Gary Grant, the founder and executive chairman of the UK toy store The Entertainer, remarked, “In 40 years in toy retailing, I have never experienced such hard conditions from the point of view of price.” He had to cease importing gigantic teddy bears from China since the retail price would have to treble due to increased freight expenses. “Will this have an effect on retail prices?” says the narrator. “I’m afraid I’ll have to say yes.”

A slew of issues, including rising demand, a container scarcity, overburdened ports, and a scarcity of ships and dock employees, have all contributed to the tightening of transportation capacity on all freight routes. Covid outbreaks in Asian export centres like as China have exacerbated the problem. Longer-distance routes bear the brunt of the pain, with shipping from Shanghai to Rotterdam costing 67 percent more than shipping to the West Coast of the United States, for example.

Shipping expenses, which were often regarded as having little influence on inflation since they were such a small portion of the entire cost, are now prompting some economists to give them more attention. HSBC Holdings Plc forecasts that a 205 percent rise in container transport costs over the last year might raise euro-area producer prices by up to 2%.

At the retail level, vendors have three options: halt trade, raise prices, or absorb the cost and pass it on later, according to Jordi Espin, strategic relations manager at the European Shippers’ Council, a Brussels-based trade group that represents about 100,000 retailers, wholesalers, and manufacturers.

He stated, “These expenses are already being passed on to consumers.”

Customers’ prices are growing in other ways as well. For example, anchovies from Peru have mostly ceased to be imported into Europe due to greater freight costs, which make them less competitive than what is available locally, according to Espin. Furthermore, he claims that European olive farmers can no longer afford to ship to the United States.

Meanwhile, transportation bottlenecks and expenses are causing problems for the transfer of arabica coffee beans, which Starbucks prefers, and robusta beans, which are used to produce ins.

Read more • bloomberg.com

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