‘The global supply chain wasn’t built for this’: freight delays hammer US

Due to the surge in consumer demand, depots, ports and warehouses in the United States are clogged with cargo, too few people to move quickly, causing delays and rising prices for businesses and consumers. Wayne Kaylor leads Way Interglobal, a distributor in Elkhart, Indiana, selling refrigerators, stoves and other appliances to well-known RV manufacturers such as Winnebago Industries. From May 4th to July 21st, Kayler’s shipping container, which holds dozens of electric fireplaces, was shuffled and lost.

“It’s crazy,” he said, pointing out that the delay sacrificed the company’s sales. “Everything is GPS-tagged, but they lost it in the railroad yard”.

California ports in Long Beach, Los Angeles and Auckland reported delays earlier this year, revealing this month that Union Pacific Railroad and BNSF Railway have reached the endorheic problem. UP stopped freight transport and BNSF began weighing freight when the railroad moved to clear the Metro Chicago Railroad Yard of inaccessible containers like Kayler.

Manufacturers are working on extra charges, lamenting lost businesses, and industrial conglomerate Honeywell International blaming supply chain difficulties with revenue hits of up to $ 200 million. Retailers Consecutive holiday season, Large chains order larger inventories than usual and want at least some of them to arrive on time.

“The global supply chain wasn’t built for this,” said Brian Bourke, Chief Growth Officer at Seko Logistics, a suburb of Chicago. “These were built to meet the seasonal surge in demand each year. With 12 peak seasons in all modes, things start to crumble”.

CH Robinson, a logistics company based in Minnesota, said overorders exacerbated shipping turmoil. According to the company, goods from China are 15 to 20 days late after arriving at a U.S. port, and some are used as temporary storage, resulting in up to a quarter of sea shipping containers. You can not use it.

Ports on both coasts of the United States are tense. Long Beach moved over 907,000 containers in May. This is the highest number since 1995. Nine of the busiest ten months of the last quarter century have all occurred in the last twelve months. The port of Savannah, Georgia, has moved 5.3 million containers nationwide in the 12 months to June 30. This is a port record, 20% more than the previous year.

Todd Tranowski, FTR’s transport analyst, said:

“On the railroad, aggressive devastation leaves some companies lacking the staff needed to cope with the surge in demand”, Tranowski said. Prices increase proportionally, and shipping costs are up to 15% higher than they were a year ago. He predicted that growth would slow later this year and in 2022, but “it won’t be a shipper’s market beyond imagination.”

Shoppers are already feeling a hit. As costs rise, companies that manufacture everything from tissue to salad dressings are raising prices to make up for the difference. According to the US Bureau of Labor Statistics, US consumer prices rose 5.4% in June, the highest in 13 years after rising 5% in May.

Procter & Gamble, the company behind Tide’s detergent and Gillette razors, warned of a $ 1.9 billion after-tax blow a year later due to rising goods and fares, after which some products were priced. Will be raised.

Known for Cheerios cereals and Haagen-Dazs ice cream, General Mills says it is pushing prices up in most grocery categories and the global market, partly due to rising shipping costs. Price increases have also been implemented by chef Boyardy Pasta and the company behind Orville Radenbacher Popcorn, Konagra, toy maker Hasbro, and motorcycle maker Harley-Davidson, with an additional 2% to cover fares. Has been added.

Kleenex pro-Kimberly-Clark said it “moved decisively” to raise prices in June and early in the third quarter to offset inflationary pressures on various consumer goods such as baby care products and Scott. Announced that it will raise the price. Toilet Paper. In some cases, the company raised prices by double digits.

CEO Mike Hsu said Kimberly-Clark faces “significantly higher” costs. This is due to the high prices of materials such as pulp and distribution costs. “Since we talked in April, commodity inflation has skyrocketed, creating supply chain challenges”, Sue told analysts in a statement.

While strong demand gives businesses room to raise prices, it remains to be seen how long people are willing to pay. Sue pointed out that spending cuts have been seen in other industries, leaving extra money in consumer goods wallets.

But “consumers are facing broader inflation in this environment across all categories, beyond consumer packaged products,” Sue added. Sean Connolly, CEO of Konagra, said the “ubiquity” of price increases in grocery stores and restaurants could mitigate the impact on demand.

For Kayler, math is easy. The shipping container fits 79 electric fireplaces. A year ago, shipping cost $ 4,500. Now, if his company can secure it, $ 20,000 is a good deal. That’s about $ 200 more per fireplace.