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40 Foot Containers Set To Cost More For European Manufacturers

Australian consumers are expected to have pay more for European appliances and products manufactured in Europe, with the cost of shipping shooting up significantly for goods set to be sold running into the end of year peak period because of ongoing problems in the Red Sea and the spiralling cost of 40-foot containers.

The average cost of shipping a 40ft container hit $6,552 last week, roughly three times higher than the same period last year, according to freight market tracker Xeneta.

Prices have not yet surpassed the peak seen immediately after Yemen’s Houthi militant group began targeting vessels in November. But they are rebounding during a usually quiet period for shipping that has been compounded by inflation issues and the rising cost of living in Australia.Typically, the peak period occurs when retailers start importing goods for the November Black Friday sales and Christmas shopping season.

“The peak season has been brought forward,” said Michael Aldwell, head of sea logistics at Kuehne + Nagel, one of the large freight forwarders that handles goods and sets the price of shipping for retailers.

Some have accused the freight Companies who have seen a slump in profits from the peaks of the COVID era of price gouging.The Financial Times reports that industry figures are claiming that the resurgence in shipping costs had multiple causes that are largely linked to the attacks in the Red Sea, and Houthis support of Gaza’s Palestinians during the Israel’s war with Hamas, they said.

These have constrained the global supply of shipping space and containers as shipowners travelling between Asia and Europe are forced to take a longer route around Africa.

Several appliance manufacturers in Australia have slashed inventories in expectation of weak consumer demand this year.

If demand picks up brands and distributors are going to have to pay spot prices.
Some European brands are now manufacturing in China in an effort to supply the Asia Pacific and greater Asian region.

Peter Sand, chief analyst at Xeneta, which supplies data to traders, said importers had learned the hard way during the pandemic that the best way to build resilience in their supply chains was “to stock up as fast as you can”

He told the FT that  businesses had told Xeneta that some decided to “bring in Christmas goods if [they] can now because [they] may be short of capacity come the traditional peak season”.

“This is a direct response to the disruption coming about with the Houthi attacks,” he added. “Nobody is really sure of when it will go away.”

Marco Forgione, director-general of the Institute of Export & International Trade, claims that ‘Even after the Red Sea disruption is resolved, “supply chains are going to be different in the future”, as globalisation is threatened by repeated geopolitical instability, Forgione added.

“We are going to see inventory management much more at the forefront,” he said.

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