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July 16, 2022

The Times – Shoppers foot the bill as cargo kings pile on the profits

When it comes to his pay packet Andi Case has never been a man to be short-changed, but last year was a truly vintage one for the kingpin of the UK’s shipbroking industry. The chief executive of Clarksons took home £6.8 million, more than the bosses of Marks & Spencer and Sainsbury’s combined. Why is the boss of a shipbroker pulling in more than most FTSE chief executives?

From its office next to the Tower of London, Clarksons’ brokers have been matching companies seeking to transport goods with shipowners for 165 years. Happily for Case, shipowners have been able to charge eye-watering rates for the past 18 months, creating a fee bonanza.

The supply chain disruption unleashed by the pandemic continues to clog up ports and restrict global container capacity. While rates have drifted down from record highs, the cost of moving a 40-foot container from China to northern Europe is $10,206, still more than seven times the average rate from 2019, according to data provider Xeneta.

John McCown, founder of Blue Alpha Capital, said that the shipping industry had raked in a “mind-bending” $188.5 billion net profit over the past 12 months — more than the combined annual profits of Apple and Google.

But as one of the world’s oldest industries enjoys the most lucrative period in its history, British importers are being hit with an estimated £29.1 billion of additional annual costs as a result of higher shipping rates, according to an analysis by the Centre for Economics and Business Research for The Sunday Times. Exporters, meanwhile, are facing an estimated £28.1 billion of additional costs. That pressure is translating to higher prices on the shelf and exacerbating the worst squeeze on living standards for a generation.

This, of course, is creating major headaches for politicians. President Biden last month rounded on the shipping industry for racking up record profits while “sticking it” to American families and businesses. Meanwhile, the UK government, which is benefiting from a jump in import duties in part driven by higher shipping rates, has said nothing.

“It’s astonishing. As a country with a vast maritime tradition, the UK should be leading talks with the G20 to coordinate an international crackdown on profiteering by big shipping companies,” said Sir Ed Davey, leader of the Liberal Democrats.

The UK has been without a major shipping company since P&O’s container shipping business was acquired by Maersk in 2005, meaning that local beneficiaries of the shipping boom have been few and far between. Clarksons, though, bucks the trend.

Read the full article

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