The UK’s Competition and Markets Authority (CMA) is considering complaints about the rising costs of shipping following allegations that the industry is profiteering from the pandemic.
Freight rates generally have been higher than normal throughout the pandemic, with recent global congestion issues leading prices to soar continuously over the last few months.
With some Asia-to-Europe shipping costs up more than six times their November levels, the CMA is considering a full investigation and is seeking information and evidence of any alleged breaches of competition law.
A spokesman told the Telegraph: “We are currently developing our understanding of this issue through discussions with international counterparts in order to inform a decision on whether any further action would be appropriate”.
Exporters ‘throw in the towel’
Mike Cherry, national chairman of the Federation of Small Businesses, said a lot of small exporters are considering “throwing in the towel” in the face of high costs.
Will Jones, chief executive of BHETA, the trade association for DIY suppliers, said shipping costs are leading to higher costs and shortages of items such kettles, toasters and power tools.
Toy maker Mattel is among the firms warning of price increases ahead of Christmas due to their increased shipping costs.
Chief executive Ynon Kreiz told the BBC the company would be “looking at” increasing prices in the second half of the year due to “inflationary pressures”.
Profits up, volumes down
According to the Loadstar, carriers are expected to break Q2 profitability records despite a surprise dip in the volume they carried in Q1.
A report by Alphaliner says hopes of a normalisation in rates this year have been dashed by supply chain disruptions such as the Suez Canal blockage, the Covid outbreak at Yantian port and increased “vessel incidents” leading to sailings being voided or sliding.
The foreseeable future offers little respite, with the British International Freight Association (BIFA) telling Lloyd’s Loading List that ocean rates are likely to remain “extraordinarily high” levels and even increasing further because capacity is “extremely tight”.
Robert Keen, BIFA director general, said there was a suspicion that shipping companies and others were “cashing in on a crisis in global container shipping”.
“The number of surcharges and fees continues to grow - often with no real explanation or justification,” he added.