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Wholesalers urged to act following Far East shipping rates rise

Wholesalers are being urged to stringently examine their logistics agreements and to seek out the most cost-effective shipping method to minimise the impact of a 30 per cent hike in shipping rates from 1st July.

The call to action comes from Nick Jones, MD of Redfern International, a supply-chain management firm specialising in the Far East market – who predicted that the Far East Freight Conference (FEFC), which governs the region’s shipping rates, would impose a rise of $250 per 20ft container.

A peak season surcharge of $90 per 20ft container will also come into force for Mediterranean trade from 1st June and for Northern European trade from 1st August.

Said Mr Jones: “This latest increase comes hot on the heels of the rise on 1st April of $200 and, with an additional peak season surcharge of $90, means shipping rates will have increased by 60 per cent since the start of the year. This, coupled with ever greater downward pressure on end-prices, will have a significant impact on margins in the run up to the crucial final six months of the year.

“In this climate it is vital that retailers examine closely their supply-chain arrangements and secure the most cost-effective method of transporting goods to off-set the effects of the rate rise.”

The increase does not include the rises in the Bunker Adjustment Factor (BAF), the surcharge applied to shipping lines to reflect the fluctuating cost of oil. BAF surcharges have increased by 25 per cent from $240 in January 2006 to $301 in June 2006.

Trade between Asia and Northern Europe grew by 11 per cent in the first quarter of 2006 and is forecast to grow by 13.5 per cent during the third.

Redfern International (www.redfernuk.com) is one of the UK’s largest supply-chain management firms and specialises in the Far East market. Having been established 10 years ago by logistics expert Nick Jones, the firm has grown by 30 per cent year on year and now shifts more than 16,500 containers from China to the UK.

Its expertise in managing the customer supply chain through advanced IT systems has seen it launch ISIS (International Shipment and Information Services) – a unique logistics planning and management system to boost business effectiveness. Offering customers real-time and accurate costing updates alongside the latest shipment information, ISIS is a powerful tool, which enables customers to streamline their international trading and forecasting. It allows users to receive daily updates on the most cost-effective routes as well as enabling them to manage their logistics on-line and get up-to-the-minute information on the progress of each shipment.

Another key development sees the company – which has set ambitious growth targets – launching a training and development arm in supply chain management, which is also believed to be a first.

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