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European retailers face goods shortages as shipping costs soar

1 month ago
in Economy
5 min read
European retailers face goods shortages as shipping costs soar
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The spiralling cost of shipping goods from Asia is causing a shortage of consumer goods in Europe for importers of everything from home furnishings, bicycles and sports kit to children’s toys and dried fruits.

A dearth of empty containers in China has quadrupled prices on sea trade routes to Europe in the space of eight weeks, with costs hitting record highs as shippers and freight forwarders compete to secure space on vessels.

As a result, retailers and manufacturers told the Financial Times that they were beginning to experience shortages of both finished goods and components.

Youri Mercier, deputy secretary-general at the Federation of the European Sporting Goods Industry, whose members include Nike, Puma and Adidas, said delays of several weeks were having a “huge impact” on businesses. “If winter collections arrive months late, there is a big problem,” he said. “It’s Covid, Brexit and now this.”

Frucom, which represents European traders of dried fruit and nuts, said in a letter to the European Commission this month that one of its members had been quoted $16,500 to ship a 40ft container, up from $2,150 in November.

Line chart of % of manufacturers reporting delays related to ports, shipping, cargo or containers showing Shipping bottlenecks disrupt global supply chain

“Several members have advised that their customers intend to cancel [goods] contracts this year as this destroys the [profit] margin they may have been able to earn,” the letter said. “Some deliveries scheduled for December are only now reaching our companies.”

Halfords, one of Europe’s largest cycle retailers, has reported gaps in its stock caused by shipping problems and mentioned freight costs and disruption in its latest trading update, although it said it had better access to manufacturing and transport capacity than smaller rivals.

Line chart of Freightos Baltic index showing China-Europe freight rates soar

Steve Garidis, executive director of trade body Bicycle Association, said: “There’s been disruption and the cost of securing containers is up to 10 times higher than a year ago.”

Gary Grant, founder and executive chairman of UK toy retailer The Entertainer, said “ridiculous” freight rates were “having a massive impact” on prices. He usually brings in around 50 containers a week from the Far East but “we are about 200 containers behind where we should be at the moment because we cannot justify paying for the shipping,” he said.

Lorenzo Granata, the owner of Nano Bleu, the largest toy retailer in Milan’s historic centre, said: “There is less product availability, which explains soaring costs . . . [Online] platforms and shops that are able to secure products that are widely unavailable can pretty much put the price tag they please on those items.”

Peter Sand, analyst at international shipping association Bimco, said higher prices were predominantly “affecting the small importers and retailers rather than the Tescos, Walmarts and Ikeas of this world” which ship more cargo and tend to be prioritised by carriers.

Line chart of Manufacturing purchasing managers’ index (below 50 = majority of businesses reported lengthening) showing Suppliers' delivery times lengthen

In a survey of 900 small and medium-sized companies conducted by global freight marketplace Freightos, 77 per…



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