Andy Simpson, of Warrant Group, tells Toy World his view on how carriers, forwarders, manufacturers and importers have been affected by the economic climate.
Andy is the managing director of Warrant Group, an employee-owned trust freight forwarder that aims to help clients focus on their business without logistics distractions. In October’s Toy World, Andy gave us his Viewpoint of the current times:
The last three years have witnessed a series of tumultuous changes to the UK economy: from a pandemic boom, low interest rates, and a buoyant market fuelled by disposable income through to post-Covid drawdowns and high stock levels. Recently we have seen inflationary pressures and high interest rates added into the mix, as well as spiking fuel prices at the pump, soaring prices on domestic food, and a UK economy that has slumped, with this year’s outlook forecast at just +0.4% growth. Forecasts suggest that 2024 is not likely to fare any better, with growth currently pegged at just +0.3%.
The fluctuating economic conditions have been felt in the toy industry, where traditionally low ocean rates have long driven competitive landed costs. However, the pendulum has swung the other way, especially last year, when unsustainable high shipping tariffs and UK port congestion combined with high e-commerce demand to create significant challenges for importers. Anyone who imports goods into Europe and the UK, or works in the forwarding and carrier management sectors, already feels the headwind of emerging economic factors months in advance. For 2023, ocean rate stability was probably top of everyone’s wish list, mine included.
At the beginning of Q3, we saw a marginal increase in demand as stock levels dwindled and replenishment orders started to filter into the economy. By August, demand had crashed, leading to a pessimistic outlook for the remaining part of the year. This has resulted in the gradual decline of ocean rates, despite carriers trying to artificially prop up the spot market in the summer. Any increases have now been eroded. So, onto the million-dollar question: Where is the 2023 rate floor? And where does this leave carriers, forwarders, manufacturers and importers?
To read Andy’s answers to these questions as well as the position of the economy entering Q4 and 2024, click here for the full article.