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Buy it Direct boss calls for investigation into international shipping ‘cartel’

Published: 16 July 2021 - James Mead

A leading British online consumer goods retailer is calling for an investigation by the Competition and Markets Authority into the ‘cartel’ run among international freight lines.

 

The cost of shipping large items overseas has increased sevenfold in a year, contributing to the sharp jump in inflation reported by the ONS, and making further price increases and product scarcity inevitable.

Nick Glynne, CEO of the Buy it Direct Group, a leading e-tailer of white goods, electronics, and furniture with a yearly turnover of £436m, and one of the UK’s top importers, said: “Demand for consumer goods has soared over the past 18 months with people unable to spend their money on travel and other activities, yet there has been a growing shortage of containers and shipping availability in that time.

“The self-perpetuating cycle has gotten out of control. Factories in China and the Far East don’t have any warehousing capacity, meaning they only produce what they can ship immediately. This, coupled with the reduced capacity in containers and ships, which are controlled by a small handful of global freight companies, has increased the cost of a container from circa £1,800 pre-Covid to more than £12,600 now.

“Consequently the freight cost, a key part of a product’s overall price, has increased enormously. For example, where the freight element for a single washing machine was £10 around 12 months ago, it is now more than £70 per item, cutting margins and pushing the price of products up for everyone in the supply chain, including the end consumer.

“As a result, retailers in the UK are left needing to decide whether to continue importing goods and hoping they can sell them at this higher price, or holding off and waiting for the shipping crisis to subside. Either way, this will mean that the prices of some large consumer goods will inevitably go up before the end of the year, while others will be increasingly hard to get hold of.

“It’s hard to avoid reaching the conclusion that the international shipping companies at the centre of this have deliberately reduced capacity over the past 12 months capitalise on the surge in demand. There are solutions available to the lines but it is clearly more profitable for them to fuel the scarcity and make greater profits on their current fleet.

“A quick look at the big five shipping companies' share prices will tell you all you need to know about the problem, and should be an urgent matter for the Competition and Markets Authority.”

“Otherwise, we’ll be in a position for the foreseeable where goods are not being made and there’s no guarantee on when products will arrive. This is a problem for all retailers and other importers of large goods, and one that’s only going to get worse if it isn’t addressed.”

Buy it Direct Group, one of the UK’s largest online consumer goods retailers, supplies white goods, furniture, bathrooms, hot tubs and electronics through its various eCommerce brands, including Appliances Direct, Laptops Direct, Better Bathrooms and Furniture 123. The retail group was founded in 1999, and has seen impressive growth in recent years, increasing its turnover by 47% last year to £436m in the year ending 31 March 2021.

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