Wednesday 01 December 2021 4:20 pm | Updated: Wednesday 01 December 2021 4:53 pm

Long term shipping costs up 465 per cent amid supply chain crisis

The shipping industry must spend at least $1 trillion (£0.8 trillion) on new fuel technology if it is to meet UN emissions targets by 2050. — Clarkson is reporting its 19th year of consecutive growth

Industry experts have warned politicians that supply chain disruption is having a big impact on the costs of shipping contracts.

Michelle Bockmann, the markets editor for Lloyd’s List warned parliament’s International Trade Committee that supply costs are spiralling as amid a global supply chain crisis driven by Covid-19 and factory closures. Bockmann said that spot rates for transporting a single box have risen by 366 per cent in the past year while longer term shipping contract rates are up by 465 per cent.

Vessel prices have also soared to “unprecedented” levels according to Bockmann. “To charter a vessel you would have paid $25,000 per day for a year ago you’re not paying $200,000 a day for a short term rental,” she said.

“Unusual and unprecedented global circumstances that have led to these conditions,” Bockmann continued, putting the lack of capacity in global supply chains down to disruption and pent-up demand caused by Covid-19 as well as factory closures.

Andrew Goodacre, the Chief Executive for the British Independent Retailers Association echoed Bockmann’s comments and warned that costs may be passed onto the customer.

“The inflation in the supply chain is much higher than the consumer inflation you are seeing at 5 per cent,” Goodacre said, pointing out that the situation is becoming unsustainable.

Tim Morris, the chief executive for the UK Major Ports Group said that the industry is struggling to keep up with relentless demand. “We need to adapt to a continuous period of high demand and disruption,” he told the committee.