June Distributor Newsletter
A message from Oliver, continued
- Inflation rates have hit record highs not seen in the last 35 years.
- Freight costs are expected to rise again for the next 12 months due to increased costs of running vessels and limited capacity.
- The war in Ukraine fuels uncertainty and increases costs.
- An increase in interest rates will decrease access to money and slow down economic growth.
- Parts of China were in COVID lockdown, and as a result, productivity went down. The effects of this will be seen in the next weeks.
- Exchange rates are highly unfavorable for European business.
- Ports are congested. Currently, more than 100 container ships, approx. 2% of the worldwide container ship fleet, are stuck in the North Sea between the ports of Hamburg, Rotterdam and Antwerp. There is no more capacity to unload and load these ships. This is because unloaded containers are being picked up with > 100% delay, and there is no storage capacity available anymore to unload ships.
In our business and pricing strategies, we suggest taking these points into account, trying to create awareness in the market and thinking about contingency plans for potential future cost increases that could occur. As I’ve already mentioned, there will be more fluctuations, and this needs to be factored into long-term contracts.