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.

Related: Freight Fiasco: Tips to Manage Merchandise and Backorders

“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.

About the author

James Zahn

James Zahn

James Zahn, AKA The Rock Father, is Editor-in-Chief of The Toy Book, a Senior Editor at The Toy Insider and The Pop Insider, and Editor of The Toy Report, The Toy Book‘s weekly industry newsletter. As a pop culture and toy industry expert, Zahn has appeared as a panelist and guest at events including Comic-Con International: San Diego (SDCC) Wizard World Chicago, and the ASTRA Marketplace & Academy. Zahn has more than 30 years of experience in the entertainment, retail, and publishing industries, and is frequently called upon to offer expert commentary for publications such as Forbes, Marketwatch, the Wall Street Journal, the New York Times, USA Today, Reuters, the Washington Post, and more. James has appeared on History Channel’s Modern Marvels, was interviewed by Larry King and Anderson Cooper, and has been seen on Yahoo! Finance, CNN, CNBC, FOX Business, NBC, ABC, CBS, WGN, The CW, and more. Zahn joined the Adventure Media & Events family in 2016, initially serving as a member of the Parent Advisory Board after penning articles for the Netflix Stream Team, Fandango Family, PBS KIDS, Sprout Parents (now Universal Kids), PopSugar, and Chicago Parent. He eventually joined the company full time as a Senior Editor and moved up the ranks to Deputy Editor and Editor-in-Chief.

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