Cost of electronics, clothing and furniture set to rise by more than 10% next year due to supply chain compression, UN report says

Clothing purchases could be more expensive in 2022.Artur Widak / NurPhoto via Getty Images

  • Prices for electronics, clothing and furniture could skyrocket next year due to the supply chain crisis.

  • Rising transport costs push companies to increase their prices.

  • Some companies are spending up to ten times more than before the pandemic to ship items by sea.

Prices for electronics, clothing and furniture could rise next year if supply chain costs remain high, according to a new UN report.

According to United Nations Conference on Trade and Development (UNCTAD), the prices of these products could increase by more than 10% globally due to higher transport costs. Consumer prices in the United States could rise 1.2% overall due to rising freight rates, he said.

A disruption in the freight supply chain – caused by increased consumer demand since late 2020, combined with labor shortages – has created delays and traffic jams in seaports worldwide. As companies scramble to find a place on a ship, they are forced to pay a high price for it.

Some companies spend as much as ten times more than they would be pre-pandemic to ship items across the ocean.

Companies that ship cheap and bulky goods, such as furniture or toys, are more vulnerable to these price increases, experts to say. These items take up more space in the containers and have lower margins to absorb the rising costs.

Gary Grant, founder of UK toy store The Entertainer, previously said Bloomberg that in his 40 years in the industry he has “never known such difficult conditions from a price point of view.”

He said he had to stop selling some items, including giant teddy bears imported from China, because his company would have to double the price of buyers to compensate for the higher transportation costs.

“If it is bulky products, that means you cannot put a lot of it in the container and it will have a significant impact on the landed price of the goods,” he told Bloomberg.

UNCTAD Secretary-General Rebeca Grynspan said in a statement on Thursday that bringing shipping costs back to normal levels would require more investment in supply chain infrastructure to improve efficiency.

Read the original article on Business intern

Elizabeth J. Harless