And just like that, we ‘re back to shipping – it seems we can’t get away from it this year. Indeed, I am beginning to run out of shipping puns for the Blog headline – we are literally one week away from “You’re ship and you know you are” or “Ship-a-dee-doo-dah.”
Shipping has found itself back in the headlines this week following the closure of China’s Ningbo port on Wednesday, after a single asymptomatic case of Covid was discovered. China is undoubtedly adopting a ‘zero tolerance’ approach to Covid outbreaks, in stark contrast to the UK and many other countries (compare China’s approach with the US, which has been hit by 100,000 new cases a day this week).
So, the six-million-dollar question – probably literally, in the case of shipping company surcharges – is what happens next? First and foremost, it depends whether more Covid cases are discovered at Ningbo, and how long the port is shut. The worst-case scenario doesn’t bear thinking about; a prolonged closure – similar to the one that happened to Yantian a few months ago – would exacerbate an already fragile supply chain as we enter peak season. If it follows the pattern of previous disruptive incidents in the Suez Canal and Yantian, it could lead to more port congestion, further shipping delays and even greater equipment shortages (especially containers). And you know what follows all that, just as night follows day…. yep, more price hikes from the shipping companies.
Actually, that isn’t technically the worst-case scenario – that would be if the Covid outbreak spreads further and wider in the region. Apparently China has already put restrictions in place in a growing number of locations including Zhengzhou, Nanjing, Beijing, Wuhan, Yantai and Shanghai – which pretty much covers all the key supply chain hubs. So, if the spread of the Delta variant escalates throughout China, take what I said in the last paragraph and multiply it…
Sadly, the abiding image in my mind after this latest incident is of all the shipping companies sitting round a table in their Pablo Escobar t-shirts, vehemently denying there is any form of a cartel or collusion occurring, while producing eye-watering new price lists which bear an uncanny similarity to each other. If this is exaggeration to prove a point (I am reliably informed that the US FMC investigation is unlikely to turn up any hard evidence of price fixing), I am yet to talk to anyone in the shipping community who wouldn’t admit privately that the shipping companies are milking the situation for all its worth. It seems that after ten years of consistent losses, they are keen to redress the balance – with a vengeance. And the choice of words there is deliberate – it has been suggested to me that the major shipping conglomerates are a particularly vindictive bunch, who would have no qualms punishing anyone who suggests they may be profiteering.
If commercial pressure from customers and freight partners is unlikely to curb the shipping magnates’ collective greed, there are realistically only two other hopes: the first is that a major government (US?) steps in and makes them aware in no uncertain terms that if they don’t self-regulate, emergency legislation will be passed introducing the largest windfall tax in the history of windfall taxes. Sadly, this too seems unlikely. So, we are left with the long-term ‘solution’ – that a cooling of consumer demand, coinciding with the arrival of new ships and new containers which have been ordered, rebalances the supply and demand equation. Quite when that will happen is anyone’s guess: it’s like asking a pension advisor to predict future returns – all you will get is a 42 page document and more arse-covering than the Kardashian’s tailor. Right now, predicting when container prices will stabilise and normalise is like predicting share/ currency / oil prices. But if my contacts were forced to hazard a guess, I am sensing that it is more likely to be the latter end of ’22 or even ’23 before the new equipment is ready. Before then, any price reduction will be driven by reduced demand – although further disruption to the supply chain could just as easily lead to prices going in the opposite direction.
In the short term, all we can do it wait and hope that the Ningbo Covid case was a random outlier – the person in question was double jabbed, although with the Sinovac vaccine…and the joke doing the rounds in Asia is that a saline solution would be just as effective against the Delta variant.
Thankfully, there is also plenty of positive news to report this week: Guy Rooney has been appointed as UK & Ireland sales director for the Zapf brand, a key bedrock of the burgeoning MGA portfolio; Laura Bull has joined Casdon Toys in the newly-created role of territory manager for the Americas, while Karen Athill has been unveiled as the regional channel director EMEA at Funko. Our hearty congratulations to them all.
And after a wonderful summer of sport with the Euros and Olympics gripping the nation, the Premier League season starts tonight – if you’d like to join the Toy World Fantasy Football League, there is still time. The League code is y715p2 and you can sign up to the game here.
Finally, I would like to thank everyone who takes the trouble to let me know about the trials and tribulations of dealing with Amazon. Rarely does a week go by without someone contacting me to flag up yet another faux pas. This week, I received one of the more unusual and outrageous examples: I am sure some of you may be aware of an ongoing problem with Amazon listings being sabotaged by competitors (or perhaps disgruntled former employees). Sadly, the despicable practice has reached new heights for one toy supplier: every time they attempt to post a new item, the correct image is replaced with something we can’t print – let’s just say it isn’t the kind of ‘toy’ which children use, and it also looks remarkably like Jeff Bezos’ phallic rocket. Despite trying for six weeks to persuade Amazon to pull the offending image off the site, the supplier has had no joy. One wonders how Amazon can allow such flagrantly malicious behaviour in the first place, then fail miserably to take any action when it happens repeatedly? If you ask me, the offending image rather neatly sums up Amazon and the way it handles disputes…
