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Cheap furniture and toys could soon get much more expensive as retailers are hit by rising shipping costs

Business Insider logo Business Insider 6/14/2021 insider@insider.com (Mary Hanbury)
a group of people sitting in a chair in front of a computer: Cheap furniture makers and sellers such as Wayfair or Ikea could be impacted. Robert Michael/picture alliance via Getty Images © Provided by Business Insider Cheap furniture makers and sellers such as Wayfair or Ikea could be impacted. Robert Michael/picture alliance via Getty Images
  • Bulky or low-cost items could be hardest hit by price hikes as shipping costs continue to rise.
  • This could include toys and furniture, experts told Bloomberg.
  • Retailers are spending up to ten times more than they would have pre-pandemic to ship items across the ocean.
  • See more stories on Insider's business page.

Toys and cheap furniture are among consumer goods that could get more expensive in the coming months as retailers continue to grapple with surging shipping costs.

According to experts quoted in a Bloomberg report, low-cost and bulky goods are more vulnerable to price hikes: They take up more room on a shipping container and have thinner margins to absorb rising costs.

Gary Grant, founder of UK toy shop The Entertainer, told Bloomberg that in his 40 years in the industry he has "never known such challenging conditions from the point of view of pricing."

Grant said that The Entertainer has had to stop selling some items, including a giant teddy bear imported from China, because it would have to double the price for shoppers to make up for higher freight costs.

"If they are bulky products it means you can't get very many in the container and that will have a significant impact on the landed price of the goods," he told Bloomberg.


Video: Shoppers seeing shortages at stores amid pandemic (NBC News)

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Low-cost furniture makers and sellers such as Wayfair or Ikea could also be hit.

Alan Murphy, the CEO of a consultancy company in Copenhagen called Sea-Intelligence, said that the cost of shipping is now making up about 62% of the retail value of some items sold by low-cost furniture makers.

"You simply can't survive on this," he told Bloomberg. "Someone is bleeding very hard."

The shipping crisis is causing some retailers to spend as much as ten times more than they would pre-pandemic to ship items across the ocean.

As reported by Insider's Rachel Premack, this is because of a breakdown in the freight supply chain. Demand dried up in the first half of 2020 and then came back at the end of the year, leading to port traffic jams and blockages. A lack of containers and dock workers has made it worse.

Many brands are now scrambling to find a space on a ship, and are being forced to pay top dollar for it, Premack reported, using Nike as an example. According to shipping expert Simon Sundboell from eeSea, Nike would have paid $2,000 for a 40-foot container pre-pandemic. Today, it could be paying as much as $20,000 for that same-sized vessel, Sundboell said.

If you have a story to share please contact this reporter via encrypted messaging app Signal at +1 (646) 768-4716 using a non-work phone, by email to mhanbury@businessinsider.com, or Twitter DM at @MarySHanbury.

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