Preparations for Christmas start now. Merchants are buying goods to have something to sell in December. China’s ports are clogged, and shipping costs are skyrocketing. The result is more expensive electronics, clothes, and cars. According to Trinity Bank’s chief economist, Lukas Kovanda, we face the most costly Christmas in history.
A significant portion of goods for international shipping are loaded in Asia. “But now the delta variant of the coronavirus is spreading there, and this is again heading towards the situation we were in a year ago, ” Kovanda clarified, adding that the congestion is affecting the whole world and making goods more expensive for the end customer.
The price differences can already be seen now. “Tablets, for example, have become more expensive year on year. This is also supported by a shortfall in chip production, which is also a problem for car companies. Baby clothes have gone up by 25 percent, women’s jackets by around 20 percent.
By Christmas, the prices will still increase by around 40 to 50 percent, ” Kovanda thinks and expects that the increase is only temporary and everything will return to normal during the following year.
According to Kovanda, retailers will try to take advantage of the situation and increase their margins. “People will want to make up for last year’s Christmas this year. All the money will be thrown into the economy.
The Czech National Bank expects inflation to reach around four percent, ” Kovanda said, adding that he believes the increase in the price level of goods could be even higher. “I would expect the most expensive Christmas in history. However, it is difficult to determine exactly which goods will be affected. It will be consumer goods from imports, ” he said.
Goods may be delayed
There could also be problems with the delivery of goods. “The Christmas season starts now. Shipping may not deliver goods on time. If everything can not be loaded by mid-September, it will not appear on our market before Christmas, ” fears Petr Rožek, the Freight Forwarding, and Logistics Association executive director. “Traders are already buying for Christmas,” journalist and consultant Ondřej Malý confirmed.
In addition, the terminal of China’s second-largest port has been closed due to a single case of coronavirus. “China and New Zealand are fighting coronavirus in a different way than we are, and so are Australia – cities are closing for 14 days because of three cases,” Malý explained.
Moreover, shipping is not easily replaced. A single vessel is capable of moving many times more cargo than, say, a truck. “A truck can carry one container weighing 25 tonnes, but a ship can load 18,000,” Rožek said, adding that only rail can compete with shipping.
It is difficult to predict when the situation will improve. “It’s not just about maritime transport. We are facing the collapse of the entire logistics system from production to consumption. The whole system needs a major overhaul,” Rožek said.