Europe’s Small Businesses Hammered by Booming Shipping Costs
(Bloomberg) -- Watch out for the fate of Europe’s small import-export exposed businesses, as chaos in global supply chains continues to hurt that corner of the continent’s economy.
The cost of hauling 40-foot boxloads of goods to Rotterdam from Shanghai surged to $13,787 per unit on Thursday, according to Drewry Shipping. The average at this time of year over the prior five years was $1,670.
The surge means shipping costs now represent about 3% of a typical boxload of goods such as clothing and toys, up tenfold from prior years, according to Philip Damas, the head of Drewry Supply Chain Advisors. It’s an even bigger portion for large, low-value goods like furniture and household appliances.
That increase particularly challenging for smaller companies struggling absorb the impact of higher costs, who often also have less clout when it comes to negotiating fees and space with global shipping lines, according to Luc Hendrickx, Enterprise Policy Director at SME United, a trade group representing smaller businesses in Europe.
“European smaller companies, they come second place,” he said.
As well as the cost surge, disruptions to supply chains mean it’s taking longer to deliver Asian-made goods to Europe -- a vital long-distance trade route for the container shipping industry.
Small and medium businesses rely on international trade to employ 6 million people across the continent, according to the European Commission. In 2017, they also were responsible for 32% of the total imports for the EU, and 41% of exports.
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