International shipping costs rose in January and February 2021 across the board, affecting the cost of trade between the UK and the EU. Bloomberg notes that the average for quoted courier rates has increased by a third to half of their previous value between November 2020 and February 2021. Reuters also reports that UK-EU export traffic has fallen by 68% on January 2020 levels.
Is this due to the end of the Brexit transition on 31st December 2020, and should businesses expect a permanent rise in shipping costs? Not necessarily. While there was some disruption in commercial deliveries (especially ecommerce) in early 2021 due to Brexit, the full answer is more complex.
Why Have Prices Suddenly Risen?
Changes to border customs and regulations can and do affect pricing - but not usually to this extent. The ongoing COVID-19 pandemic has warped the picture against what might have been. Truly extraordinary circumstances have meant that there are now many other unavoidable factors currently artificially inflating costs. Any sharp increase in UK-EU import and export prices will likely prove to be a temporary setback to British and European businesses and hauliers. Here's why:
The COVID-19 Pandemic
The Pandemic is still the most significant factor inflating UK-EU and all other shipping costs. As turnaround has slowed down and safety measures appeared from March 2020, standard shipping rates, unfortunately, had to increase.
Why? National lockdowns and international restrictions have narrowed the legal, safe window to move goods. It's now necessary to buy and apply regular disinfection, PPE, and social distancing measures (e.g. barriers) to all hauled goods, customs officials, and freight staff. And the demand for home deliveries of consumer goods has risen drastically, putting strains on available shipping. Thankfully, vaccines, natural burnout, and falling infection rates mean that COVID-19 should be history by 2023 at the latest.
Priority Shipping Costs And Last-Minute Transfers
The end of Q4 (December to January) of any given year is always a busy time for European hauliers. Christmas, sales, and end-of-year clear outs mean that companies can expect to pay a higher premium to move goods across Europe during the winter. This particularly affects shipping to some areas of Scandinavia (e.g. Finland, northern Norway, and Sweden), in which certain routes are inaccessible for parts of the winter.
In 2020, that effect compounded in Britain. A combination of companies trying to transfer freight tied to the old (pre-Brexit) customs rules, a pre-Christmas lockdown, and increased household demand, pushed peak-demand prices to a hugely raised end of December ceiling. Bloomberg's January data for freight now indicates that shipping costs are falling rapidly again in the UK. As of February, they're now slightly above pre-2021 levels on average, but are still on a downward trajectory.
Delays And Adjustments
Brexit has changed how UK-EU customs work by requiring more WTO-authorisation and entry documentation for each shipment made in or out of Britain. Checkpoints, tax authorities, and governments are still adjusting in a time of chaos and upheaval.
Customs changes lead to longer turnaround times as the administrative teething problems work out. In turn, this can lead to slightly higher client costs. The more time freight has to spend on the road, rails, or sea, the higher the cost to keep it moving. Accidental mistakes such as mislabelling, lack of documentation and Customs Union carry-overs can also increase costs. Impounded, stalled, and seized goods need moving once cleared or rejected, too, adding surcharges.
The Consumer Goods Squeeze
Did you know that the temporary rise in premium costs has mostly hit consumer items and perishable shipments, not industrial B2B shipments? The financial picture isn't the same for everyone. The price of B2B transfers (e.g. internal part shipping), service vehicle journeys through customs and small-scale, intercountry postage has been mostly, but not entirely, unaffected. Why? More and more people are relying on online shopping for product fulfilment. The explosion in private customers ordering parcels in lockdown has placed a strain on an already stretched network.
China's Container Shortage Problem
COVID-19 has also made manufacturing and shipping the equipment used for the shipping itself trickier. Most of Europe's heavy-duty shipping containers come from China. Chinese manufacturing has been experiencing drastic falls in output against demand and problems moving goods into Europe due to reduced Asia-Europe transit capacity. In turn, transit costs have temporarily risen as companies run out of spare shipping containers. Chinese manufacturers are currently working closely with European hauliers to quickly resolve the situation by upping their output.
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