Shipping costs soar as stores rush to buy Christmas goods

European retailers are pushing Christmas orders forward as rising transport costs and disruptions to trade routes threaten festive deliveries, experts say.

Shipping prices have soared in the Red Sea in recent months after Western companies’ ships came under attack by Houthi rebels who back Hamas in the country’s war with Israel.

Container prices peaked in January, then fell, but have recovered sharply in recent weeks.

One business told the BBC that the increased costs were likely to be passed on to bigger-ticket items such as white goods.

Nick Glynn, head of Buy It Direct Group, which owns several online retailers including Appliances Direct and Laptops Direct, said these retailers have to plan and book well in advance to ensure shipments arrive on time.

He said he doesn’t expect Black Friday or Christmas inventory to be affected because he plans ahead.

But he said: “Suddenly we have to store goods for longer periods, which impacts cash and warehouse space. We can’t take the risk of ordering later.”

Glynn explained that spot rates – the current price for immediate delivery of the commodity – have risen dramatically in recent weeks, from $4,500 to $7,500 (£3,500 to £5,900).

“This will particularly impact large, bulky items with low profit margins such as furniture, barbecues and kitchen appliances,” he said.

He said there was “no way” most online retailers could absorb price increases on big-ticket items.

“So unfortunately for consumers, we’re going to see significant price increases on these big-ticket items over the coming months,” he added.

Unrest caused by the Houthi rebels in Yemen has limited space on ships and container supplies worldwide.

Houthi rebels have already attacked more than 50 ships in the Red Sea and the Gulf of Aden.

As a result, shipping costs have skyrocketed: The cost of shipping a 40-foot container now averages more than $4,000, up 140% from 2023, according to freight market tracking firm Xeneta.

Peter Sand, principal analyst at Zeneta, said importers have learned many lessons from the pandemic, including that “the easiest way to protect your supply chain is to ship as much goods as possible, as quickly as possible.”

“We’ve heard that some companies are already shipping holiday cargo in May, and that’s exactly what’s happening,” he said.

Typically, retailers start importing goods in late summer and fall in preparation for Black Friday sales in November and the Christmas shopping season.

Sue Terpilowski, of the UK Chartered Institute of Logistics and Transport, agreed, saying companies were realising that disruptions to Red Sea shipping routes due to Houthi attacks could continue into the autumn.

“People are actually bringing their shipments forward to avoid the headlines: ‘Christmas canceled, nothing in the stores,'” she said. “So they’ll arrive in plenty of time to be prepared for any eventuality that may occur at sea.”

Attacks on ships have forced owners of vessels traveling between Asia and Europe to take longer routes around Africa, with vessels setting off earlier in the day to allow for the extra time needed to make the detour.

“The impact of the Red Sea detouring that began in December last year is only now becoming apparent, forcing ships on Asia-Europe routes to make a detouring trip around Africa that adds more than 100 days to their journey,” said Dominik Nadelhofer of Kuehne + Nagel, a major maritime logistics company.

He added that container facility turnover has also been disrupted, saying only about 50 percent of the world’s container shipments are currently being completed on time.

In addition to concerns about possible future Houthi attacks, there are also growing fears that as the Navy focuses on countering the Houthi rebels, reduced maritime patrols in other areas could give Somali pirates an opportunity to expand their operations.