US and European retailers paying double for ship space

Retailers and distributors in Europe and the US are outbidding each other to secure scarce cargo space on ships. They are paying up to double last year's rates as they navigate through the peak-shipping season for bringing in merchandise before Christmas.

The sharp increase in shipping rates is a result of the turmoil of last year, when carriers took 10 per cent of the global fleet out of service and absorbed collective losses of $US20 billion ($22bn) as US and European retailers curtailed imports in the recession.

These problems have been heightened by an acute shortage of the 20ft to 40ft containers used to transport goods as the two Chinese manufacturers that control the market, CIMC and Singamas, closed their main factories last year. Production is resuming but there is a huge backlog of demand.

With fears growing that shoppers may hold back in the rest of the year, retailers are more anxious than ever to ensure they have the right goods in stock at the right time.

"You want a supply chain that moves things smoothly," Jonathan Gold, vice-president of the National Retail Federation, said. "Right now, it's not doing that."?

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