Shipping companies rake in billions by forcing Australian and global CE and appliance suppliers to pay thousands more for a single shipping container.
Moller-Maersk, a Danish shipping company that operates in and out of Australia, has seen its revenue soar 55% over the past year.
Last week, a major Japanese home appliance brand, a major supplier to Harvey Norman, learned that the price of a container from Thailand to Australia had risen to $10,500. Previously, the same container cost $3,500.
Maersk, the world’s second-largest container shipping line by capacity, said revenue rose 55% to A$94 billion last year, with earnings before interest, tax, depreciation and amortization tripling to a record AU$33 billion.
“It’s a record in every dimension,” chief executive Soren Skou told reporters in London overnight.
Maersk said it expected supply chain issues to persist in the second quarter, but that “a normalization [should] occur at the start of the second half” and added that it was again targeting EBITDA of $34 billion in 2022.
On its Australian website, the company claims that “due to the COVID-19 lockdown, it has become necessary to change supply chain processes”. At Maersk, we are doing everything we can to deliver agile solutions that support the supply chain in these times of uncertainty in the global marketplace.”
Maersk says it offers a convenient container transport and storage solution to provide additional flexibility in these difficult times.
Some observers say that shipping companies are “pricing gouging” and that several countries will “suffer inflation problems” because of the shipping companies’ actions.
The Danish shipping company says it expects global supply chain issues to ease in the second half of this year.
The shipping line has increased its dividend sevenfold following “shipping companies’ price hikes”, a retailer said.
Skou said he expects a “normalization of the situation” and lower freight rates as Covid restrictions are lifted and infection rates come down, which will likely lead to freight relief. congestion in ports.
“It’s fair to say that we don’t have a lot of experience coming out of a pandemic. It’s hard to say exactly how it will play out,” Skou said. “We see the first quarter in line with 2021 and the second quarter is very strong.”
“We continue to have the combination of very high demand and less supply,” he added, pointing to waits of three to four weeks to enter ports.
It said 70% of its shipping business this year is expected to come from long-term contracts, which would reduce volatility, Skou said.
Skou told the Financial Times in London that retailers need an “omnichannel supply chain” where they can move goods from distribution centers to their stores as well as from distribution centers directly to customers. “We want to be able to offer both [and] sell products to transport the goods from the factory in China to the consumer,” he added.
A visit to several retail stores by ChannelNews this week revealed that stock is running low and several retailers have decided to pile empty boxes on shelves to mask the shortage of stock.
Another problem facing retailers is that several brands have decided to sell the limited stock they have directly through their own websites.
Apple Dyson and Sony are just a few of the brands that are limiting stock availability to retailers while increasing their online sales. Apple also supplies its own stores with inventory at the expense of its retail partners.
About the author of the article