Kogan KGN Strategic Valuation, page-2

Some comments on international shipping:

I am personally aware of this issue as it is effecting the importation division of my own businesses as well.

Shipping as had two issues, only 1 has been fixed in my opinion:
a) Shipping delays caused by fixed shipping supply and massive increase in demand. The result of this was two fold:
i) A rundown of local imported inventory as re-ordering time was extended (ie shipment time increased)
ii) Increase in shipping costs (around 15-20% increase in the cost of shipping containers).

Business has reacted to (i) by increasing their orders to increase domestic stock on hand (for us this was occurring from Nov last year to around Feb this year) and by increasing the forecast lead time (for us 4 weeks historical shipment time, to 8 week buffer shipment time in our re-ordering cycles).

This problem has now been fixed.

But:
ii) is still a problem. These increases in shipping costs are expected to continue for the foreseeable future. Increased shipping costs will only come down when either there is a significant drop in demand (ie decline in consumer and business demand for imported products) or when shipping supply increases significantly. Shipping supply cannot just increase rapidly (think how long does it take to build ships). The second component of shipping supply are the shipping containers. During the 1st phase of the corona virus heaps of shipping containers were converted to scrap metal as demand fell off a cliff (think back March-April 2020). These need to be rebuilt (this is occurring now).

Conclusion: the increased cost of importation will still be with us for a while yet.