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Gloucestershire Business News

Gloucestershire businesses hit by steep container price rises

Gloucestershire businesses are feeling the pinch as a massive rise in shipping container prices continues to have a serious impact on import costs.

The effects are being felt across the board with many businesses - from retail to catering - relying on imports of raw materials and manufactured goods from the Far East. One Gloucester bicycle retailer says it's had a dramatic impact on prices and supply.

The British Chambers of Commerce and the Chambers Network are so concerned they've written to Andrea Coscelli, chief executive of the Competition and Markets Authority (CMA) calling for an urgent investigation.

A recent BCC quarterly economic survey reveals there's been a 7-fold rise in container hire costs over the past year or so.

The CMA, in response, says it is taking allegations of 'collusion and price fixing' seriously.

Sam Holliday, Federation of Small Businesses Gloucestershire, said: "On the surface, the shortage of container ships across the world may seem unrelated to the day-to-day lives of most Gloucestershire businesses but the reality is this is a serious issue which could directly affect the delivery and pricing of many of the goods our local businesses need.

"The Covid-related shortage has seen a dramatic upsurge in costs and huge delays at the docks and this is a problem not only for businesses looking to sell goods to often very impatient customers but also for those who are awaiting the import of machinery, parts or materials for their own needs."

Mike Mellor, co-owner of Quella Bicycle, based at Waterwells Business Park in Quedgeley, said they had already had to put prices up by 10% and are considering another hike of 10% in the New Year to soak up the sharp increases.

Mike said: "The prices of containers have been rising steadily since the beginning of the year and they seem to have shot up recently."

The blockage of the Suez Canal by the Evergreen ship had a huge impact back in March. It prevented any vessels using the shortest route from the Far East to Europe for six days. The vessel finally docked in Felixstowe earlier this month four months late.

Quella imports from China and Taiwan and was directly affected by the incident.

Mike said: "That was a nightmare - one container took 12 weeks instead of 4 - and for us that's a big impact, that's a couple of months' worth of sales. We went out of stock of items and had to let people down which has an impact reputationally."

This time last year it was costing them about £4,000 for a container from Shanghai. Now it's more than £13,000 a container.

He said: "That's an increase that is spread across 300 bikes, so it has a massive impact on us.

"We have had to push up our prices, but it is still impacting our margins. We have got by with a bit of soak and a bit of price hike."

As well as the Suez blockage, there appears to be international competition with the United States outbidding on prices for containers, to meet pent up demand for product after the Covid crisis.

Mike added: "The bike business was one of the lucky ones in Covid. Demand went up but it was very hard to get stock. We implemented a very good pre-order system to manage the delays.

"Now we have the same delays for a different reason and a price hike just as demand tails off."

The bike business has also been hit by the fall-out from Brexit with trade arrangements 'desperately badly handled', he said. A 14% duty on products and complications with VAT have meant sales to Europe have 'almost disappeared'.

William Bain, Head of Trade Policy at The British Chambers of Commerce, said: "The BCC is seeking this full investigation in order to present fuller quantitative and qualitative data from the Chambers Network on the contribution of structural problems in the international shipping market to shortages of raw materials and other inflationary pressures currently harming UK businesses."

A CMA spokesperson said: "We are aware of increases in the cost of international shipping and have received reports of market issues and allegations of collusion and price fixing - all of which we are taking seriously. As such, we welcome additional information and evidence of any alleged breach of competition law.

"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."

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