Gyde To Lead Times And Freight Costs Storm

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Six months ago Mila's Richard Gyde first wrote to sound an early warning about the storm brewing in the freight market - now the storm has hit and lead times and cost are blowing in the wind.

Gyde now warns that booming demand in the West, lack of capacity on container ships and a shortage of the physical containers themselves have pushed up the price of shipping - and costs.

"Other business leaders," says Gyde, "have been giving updates about the scale of the problem and like Mila, many have had to introduce freight surcharges to try to share some of the burden.

"Back in November, I don’t think any of us could have imagined how long the storm would last or just how bad it would get. The price of shipping a 40-foot container from China rose from around $2,000 in October 2020 to more than $8,000 in April 2021.

"There were signs of a slight softening in March which gave us all some hope but prices have steadily risen again and it’s depressing to have to report that the prices quoted for sailings in May were around 25% higher again."

Before and after Covid

Pre-Covid, shipping times from China were consistently around 36 days but now are a minimum of 56 days and the level of demand means lead times have doubled as well. The situation was made worse by the Ever Given blocking the Suez Canal, which forced many shipping lines to reschedule sailings.

The Covid surge in India is causing crew shortages with various ports refusing entry to ships with crew from the region.

Airfreight

Gyde continues: "At Mila, we are doing all we can to ensure continuity of supply and we have already spent more than £440,000 on airfreight since the start of the year to try to keep all those customers who stayed loyal to Mila during the pandemic supplied with stock – and we haven’t passed on any of that additional cost.

"There’s no doubt that every business that imports from the Far East is feeling a similar level of pain - whether that’s High Street retailers or fenestration hardware suppliers - and price rises are understandably widespread.

Pass it on

"While there is no real sign of the situation easing, I would, once again, urge the market to be patient and wherever possible, pass on the increased costs they are facing from component suppliers right across the market.

Picture: Mila's MD, Richard Gyde.

Article written by John Roper
19th May 2021

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