Price spike reaction

Brands ‘reshoring’ to reduce shipping costs

A new direct route has opened between Scotland and China but firms want to cut shipping costs

A wave of “reshoring” of manufacturing is set to hit the UK as British brands react to spiking shipping costs, according to new research.

Four in ten firms (40%) of brands surveyed say they are planning to manufacture domestically in reaction to the cost of shipping. 

The findings by global fulfilment firm ShipBob and research partner CensusWide emerge from a survey of 750 UK brands. With approximately 580,000 eCommerce enabled websites in UK, this could mean 232,000 businesses moving production to the UK. 

The survey also comes just weeks after new shipping lines were opened to provide quicker access to foreign markets via the ports at Dundee and Greenock.

The researchers found that a cost of shipping a shoebox-sized parcel to America has risen by nearly a third in just 12 months, from £15.73 to £20.56, thanks to a combination of currency fluctuations, international fuel surcharges and inflation rates.

Despite DTC (direct-to-consumer) sales enjoying continued growth since the pandemic, just 19% of small brands say they will be prioritising their own DTC channels to drive the most growth over the next 12 months.

There are also signs that many larger competitors currently considering axing free shipping policies may be at risk of losing customers. Small brands said they have noticed consumers are less willing to pay for shipping than previously (32%).

Enda Breslin, ShipBob EMEA GM, said: “Spiralling shipping costs are now strangling the growth of the UK’s blossoming e-commerce entrepreneurship sector as brands begin to neglect cross-border commerce.

“International sales are the quickest way to grow an e-commerce business, so while it’s understandable that many will look to protect bottom lines by focusing inside British borders, it will mean that UK brands won’t scale as fast as they should.

“Small brands should still look to expand ambitiously but should pay extra care to do so in a resilient way, as making use of the sophisticated ecosystem of e-commerce partners.

“Choosing fulfilment partnerships carefully will help small brands position themselves closer to their overseas customers and level the playing field with local competitors when it comes to shipping speed and cost.”

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