The “Chicago Express” vessel beneath Hamburg’s Köhlbrand Bridge | Source: Hapag-Lloyd Ag

Whenever global industry runs into a crisis, there’s often a side effect that raises eyebrows as certain companies involved turn record profits. Now, amid the global shipping crisis, one toymaker is firing shots at the major global shipping companies for “pure price gouging.”

According to ZURU Co-Founder and Director Nick Mowbray, “shipping companies are reporting profits in Q1 that are more than the 10 previous years of Q1 profit combined. Then we get emails like this saying due to operational challenges, another blanket surcharge will just be added arbitrarily. That ‘extra’ random charge is almost double the cost it was to ship the entire container a year ago!”

The letter in question was sent to clients by Hapag-Lloyd AG — one of the major global shipping companies — informing them of a “Value Added Surcharge (VAD)” for Trans-Pacific trade, including shipments from China to the U.S. and Canada. Effective Aug. 15, the VAD surcharge will be billed at $4,000 for 20-foot containers and $5,000 for 40-foot containers. Mowbray shared the letter publicly on LinkedIn.

Source: Nick Mowbray, ZURU

Mowbray’s sentiments echo those of toymakers that responded to the Toy Book‘s summer Business of Play Survey in which more than 93% of respondents reported freight increases of double (38.5%), triple (30.8%), and more than triple (23.1%) over the past year.

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“Do these shipping companies consider the devastation this is causing to supply chains and companies having to change where they produce goods?” Mowbray asks. “The world relies on trade and regions being able to specialize and become more efficient. Cost-effective global trade is deflationary. Should we be worried that there are three alliances in global shipping that control almost the entire market? Is government oversight strong enough to ensure there is fair competition? These alliances were originally meant to help benefit the consumer with collective bargaining power with ports, for example.”

Last week, The Toy Association called upon the U.S. government to prioritize the global shipping crisis.

“With our members, many of whom are small businesses, reporting a 500% increase on containers, along with increased trucking and air freight rates and rail surcharges, absorbing these costs has become extremely challenging,” said Leigh Moyers, director of federal government affairs at The Toy Association. “As shipping for the holiday season begins to accelerate into the fall months, we will continue to work with federal government officials and stress the critical need for developing and implementing short-term and long-term solutions to resolve this issue.”

Look for more information on the current state of the industry in the August issue of the Toy Book, coming soon.