Shoppers warned ‘order Christmas presents now’ over supply chain woes

Container costs between China and the US have soared from $4,000 to $20,000 in the past year

A Chinese worker looks on as a cargo ship is loaded at a port in Qingdao, eastern China's Shandong province on 13 July 2017. (AFP via Getty Images)

UPS has warned of supply issues in the lead-up to Christmas, due to the knock-on effect of Covid-19 and low global vaccination rates in developing countries.

“The logistics industry does not see 2022 as having any less disruption in supply chains than in 2021,” Scott Price, the president of the US multinational shipping company, told AP on Sunday.

Transport companies have struggled to contend with demands for deliveries during the pandemic, due to disruptions to the labour force, factory shutdowns and bottlenecks at ports caused by Covid.

According to freight-tracking company Freightos, container costs between China and the US have soared to $20,000 in the past year, compared with only $4,000 a year ago, with prices between countries jumping 500 per cent year on year.

The surge in shipping costs is set to cause a price hike for goods, ranging from food items to big-ticket items made in China, plus raw materials and building supplies.

“I half-jokingly tell people ‘Order your Christmas presents now because otherwise on Christmas day, there may just be a picture of something that’s not coming until February or March,’” said Price.

Container slots are over-booked, and it’s creating a bidding war. Suppliers are having to choose whether to go out of stock on certain items or pay the inflated costs and pass the extra fees on to the consumer.

“Global trade right now is the hottest restaurant in town,” Brian Bourke, chief growth officer at freight company Seko Logistics toldThe Wall Street Journal. “If you want to get a reservation, you need to plan it out two months in advance. Everyone’s trying to grab any spot they can and they’re all spoken for.”

Companies like Amazon are paying the exorbitant shipping fees, according to consultant Zhu Guojin from Chinese company Jizhi Supply Chain Service Yiwu Co: “Last year, many clients delayed shipping in the hope that the cost could come down. But that’s no longer the case,” said Mr Guojin. “Most do not seem to care about prices anymore.”

The backlogs are expected to continue until way into 2022, as there is typically a break for Chinese New Year in February.