As a company that imports tonnes of raw materials every year from India, we have seen the cost of bringing in goods from India increase three-fold – and it is only a matter of time before we have no choice but to pass these costs on to our customers.
For many businesses, the trade route from Asia is more important than ever in the wake of Brexit. We began importing goods from India four years ago and spent time out there, making contacts, building relationships and setting up our supply chain.
We have some fantastic business contacts in Mumbai and other parts of the country who appreciated that we took the time to explore the market there and to fully understand the cultural differences in how they do business.
We’ve worked extremely hard to establish a network of contacts there and to set up what can be a complex supply chain. Sniffers is now the UK’s biggest importer of Indian water buffalo – we currently bring in around 500 tonnes a year for our own brand healthy treat range.
However, the hike in shipping costs is a real problem for many companies who bring in materials from India but also China and all corners of Asia.
Firms are understandably reluctant to pass on these increased costs to their customers and it’s a situation that has resulted in some even making a loss on what they sell. Ultimately, if small businesses cannot absorb the higher costs then they face going under.
We understand the problem is exacerbated by a shortage of empty shipping containers in Asia, as well as bottlenecks at the UK’s sea ports. The continuing pandemic in different parts of the world is adding a further degree of complexity.
This is due in part to bottlenecks at our ports caused by a surge in imports of PPE, then the Christmas rush, then an increase in activity after the first wave of the pandemic. As a result, shipping lines are charging a premium for deliveries to the UK or are bypassing our ports altogether.
Many large retailers and manufacturers sign annual deals with the ocean carriers to lock in their container freight rates; however, this is not an option for smaller organisations.
For the many businesses currently looking for alternative suppliers in the wake of Brexit, these increases could not come at a worse time. Sniffers, for instance, used to import 95 per cent of our materials from Europe but now, that is down to 45 per cent. It’s a situation that, without intervention, can only get worse.
One of the most worrying elements is that the problem appears to be receiving little or no attention in Parliament. It is time the Government stepped in.
The major players recorded a combined rise in profits of more than the previous five years combined. It’s unfathomable that this can be unchallenged when so many small businesses are reliant on being able to access goods at a certain rate.
The British Retail Consortium and the Food and Drink Federation have already raised concerns with the chair of the Commons Select Committee and the International Trade Committee to request an urgent inquiry.
But businesses need action now – the impact on operations can only get more serious; in such circumstances, it’s virtually impossible to plan and troubleshoot around the issue. It’s only a matter of time before small businesses are forced to close because of the severity of the rise in costs.
Many firms, like ourselves, have invested time, money and a great deal of effort into establishing supply chains with India and other parts of Asia. Yes, there are issues caused by the pandemic and an increase in demand following Brexit but it’s a situation that seems weighted against UK businesses while the shipping giants sit back and count their profits at our expense.
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