Containing The Crisis

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The increasing cost of shipping containers

Over the last year, businesses around the world have been affected by the vast shortage of shipping container storage and the significant increase in cost to what’s available.

There is nothing like a shortage to accelerate demand and pricing, but there has been an 800% increase in the cost of shipping containers from China to the UK in the last year[1].

With the intensifying financial pressure on businesses to acquire and store stock, accurate forecasting and procurement has never been so business-critical.

What’s caused this?

Due to the ongoing pandemic and several supply chain disruptions, the demand for shipping increased to record levels in 2021. Now, shipping lines and leasing companies are ordering more containers than ever before, forcing shipping container prices to rise to a profitable point.

Ultimately, the significant causes of the shipping container shortage and increased cost in the UK is due to:

  • Supply restrictions in China, where the majority of containers are manufactured.
  • Difficulties in moving containers into Europe and the UK.
  • Businesses reusing containers instead of selling them on.[2]

Why shipping containers are so crucial to the UK supply chain?

Before the “container crisis”, shipping containers were favoured as a tool for storage and logistics management as they can safely carry a wide range of substances and materials.

Shipping containers are strong, watertight and resistant. Capable of carrying dangerous liquid substances like hydrocarbons as well as heavy-duty solid products.

Due to the versatility of shipping containers as stock storage and transportation methods, the vessels are in high demand from businesses across all industries.

The impact on businesses

The inability to securely ship and store stock is threatening to the supply chain of any business.

In addition to the massively increased costs of securing shipping containers, businesses are encountering additional disruptions to their operations.
  • Warehouse spacing limitations – Businesses that are heavily reliant on shipping containers for storage face having to increase the amount of stock they hold within their warehouses. Inevitably, there is only so much stock a warehouse can hold before exceeding its limitation and compromising operations.
  • Delays in transportation – Shipping containers are well suited and flexible to support a variety of freight operations. Without them, businesses face mass delays of stock being received from suppliers and being delivered to customers.
  • Over and understocking – With the risk of not being able to receive or despatch the right stock at the right time, businesses face being oversupplied with stocking that’s going out of demand. Whereas the products that are generating orders cannot be attained.
  • Failure to fulfil orders – Ultimately, this will result in unsuccessful order fulfilment or failure to meet lead-times.
  • Losing customers and capital – 70% of your customers would sooner switch supplier than wait for their desired item to come into stock.

How can businesses prevent this?

In this climate, it isn’t just crucial to accurately forecast your demands and stock. It is vital that you accurately analyse shipping container availability. With the cost and availability of shipping containers, there is no room for error when it comes to your purchasing and stock control.

By streamlining these operations and minimising the risk of error, your business can more efficiently manage stock and logistics. This will free up space in your warehouse and enable more profitable forward planning with your suppliers, couriers, sales and marketing.

OrderWise

OrderWise gives you the power to ensure you have the right stock, when you need it, in accurate quantities at the most profitable times.

OrderWise Purchasing automatically identifies stock demands and generates purchase orders, removing the manual administrative burden. This also analyses:

  • Outstanding sales
  • Current and desired stock levels
  • Previous and future demands
  • Lead times and due dates

In addition, OrderWise Purchasing enables you to incorporate container storage availability and container due dates into forecasting and reporting. This increases accuracy on lead times and locating stock, as well as forward-planning with your supply chain.

Sources

[1] https://www.export.org.uk/news/579204/Is-the-UK-being-disproportionately-impacted-by-soaring-freight-prices-due-to-Brexit-.htm

[2] https://www.budgetshippingcontainers.co.uk/company/shipping-container-prices/

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