Whilst the UK might be getting some level of control over COVID-19, much of Asia is gripped firmly by the virus once again. Malaysia, Indonesia, Thailand, South Korea, Japan and others are all experiencing record numbers of cases, hospitalisations and deaths. It is a reminder that even though things are improving in the UK, other parts of the world are still suffering.
Meanwhile, in China, the growing spread of the Delta variant is now causing problems once again with its shipping facilities. This time the Ningbo shipping port is partly shut down, and it could again cause problems for UK fenestration.
Ningbo closure could cause shortages
For some perspective, the port at Ningbo-Zhoushan is the third-largest in the world. Although not fully closed, the partial closure is already causing problems and the ripple effect it will create will be felt in the weeks and months to come. The timing of this could not be worse, as this is the crucial quarter where global shipping builds up to Christmas.
UK fenestration also looks like it is going to be hit with issues which will be felt at the back end of the year. A number of components, including window handles, are sourced from that port. The effect of the delays is expected to be felt later on in the year. Those with good levels of stock already may not suffer too badly. Those suppliers who have struggled to build up stock during the course of the year may be affected more seriously.
China operates a zero COVID policy. Meaning only a handful of cases anywhere sees lockdowns imposed, mass testing and in this case, business facilities shut down. Whilst the Chinese economy can cope with such measures, being the second largest in the world, their actions and policies are having effects on other nations around the world.
This news from China and Ningbo will be wholly unwelcome, as the fenestration sector continues to suffer from major shortages of other products and general delays affecting many other parts of the industry. At the moment, glass shortages are causing problems for many businesses, and profile and hardware are also strained.
What this will do once again is bring into focus the argument for more of what we install in the UK to be made in this country. If only for the simple reason to protect better our supply chain. This is a very good example of how problems overseas can have impacts on our businesses despite being thousands of miles away.
Shipping prices still rising
Away from port closures, the cost of shipping continues to have an impact on UK fenestration. High global demand, coupled with a tight supply of containers and ships, and them being in the wrong places at the wrong times, means the cost of sea shipping continues to rise.
We are seeing the effect of this in rising costs and surcharges on items such as composite door slabs. Basically, anything that has to be sent in a container from overseas is going up in price because of the now extortionate cost to put it on a boat from another country. In some cases, the cost per container has risen ten or fifteenfold in a relatively short space of time.
There are no signals that this situation is going to be resolved any time soon. The only way that any kind of normality might return to this form of transport is when global demand cools and consumer spending begins to drop. But whilst there is plenty of spare cash in people’s pockets both in the UK and around the world, the chances of a tangible drop in demand any time soon are slim.
For companies in this sector, the best thing to do is to continue to pass down the price increases all the way down the supply chain to the end-users. In our cases the homeowners. Remember that UK families are sat on hundreds of billions of pounds worth of spare cash thanks to lockdowns and the inability to spend disposable income in normal ways. The public can afford these higher prices and have demonstrated so over the past year.
We need to keep doing that to protect the profitability of our businesses in the months to come. As pressures ease, which may come in the second half of 2022, we’ll be in a better place to plan for the future.
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