Cheap furniture to become much more expensive in a shipping crisis: experts
- Bulky or inexpensive items could be hit hardest by price increases as shipping costs continue to rise.
- This could include toys and furniture, experts told Bloomberg.
- Retailers are spending up to ten times more than they would have before the pandemic to ship items across the ocean.
- See more stories on the Insider business page.
Cheap toys and furniture are among the consumer goods that could become more expensive in the coming months as retailers continue to face rising shipping costs.
Low-priced, bulky products are more vulnerable to price hikes, according to experts cited in a Bloomberg report: they take up more space on a shipping container and have thinner margins to absorb rising costs.
Gary Grant, founder of UK toy store The Entertainer, told Bloomberg that in his 40 years in the industry he “never experienced such harsh pricing conditions.”
Grant said The Entertainer had to stop selling certain items, including a giant teddy bear imported from China, because it would have to double the price for buyers to offset the higher transportation costs.
“If it is bulky products, that means you cannot put a lot of it in the container and it will have a significant impact on the landed price of the goods,” he told Bloomberg.
Manufacturers and sellers of low-cost furniture such as Wayfair or Ikea could also be affected.
Alan Murphy, CEO of a consulting firm in Copenhagen called Sea-Intelligence, said shipping costs now represent around 62% of the retail value of some items sold by low-cost furniture makers.
“You just can’t survive on this,” he told Bloomberg. “Someone is bleeding very badly.”
The shipping crisis is forcing some retailers to spend up to ten times more than they would before the pandemic to ship items across the ocean.
As Insider’s Rachel Premack reported, this is due to a disruption in the freight supply chain. Demand dried up in the first half of 2020 and then returned at the end of the year, leading to traffic jams and port blockages. The lack of containers and dockworkers made the situation worse.
Many brands are now scrambling to find a place on a ship and are forced to pay a high price for it, Premack reported, using Nike as an example. According to eesea shipping expert Simon Sundboell, Nike paid $ 2,000 for a 40-foot container before the pandemic. Today, he could pay up to $ 20,000 for that same-sized vessel, Sundboell said.
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