Freight Costs and Volumes Surge, Inflation Fears Heat Up
February was off the chart.
“We are seeing an unprecedented rise in logistics costs,” General Mills CEO Jeff Harmening told the Wall Street Journal after the company reported earnings. Shares dropped 9% on Wednesday and another 2% on Thursday. They’re down nearly 40% from their peak in July 2016.
The Maker of cereals, Yoplait, and other packaged food brands said that freight costs have surged to near 20-year highs in February. Other packaged food and snack makers, including Campbell, Hershey, Mondelez International (Oreos, Newtons, Premium and Ritz crackers), Sysco, Tyson Foods, Hormel Foods and others have all warned about rising transportation costs. And they said they’d try to pass these transportation cost increases on to their customers.
And this is what has been happening in the transportation sector in the US: Shipment volumes by all modes of transportation combined — truck, rail, air freight, and barge — surged 11.4% year-over-year in February according to the Cass Freight Index. The index, which is not seasonally adjusted, hit its highest level for any February since 2006:
February is in the slow part of the year, and yet it was nearly on par with June 2014, at the seasonal peak, and the peak month since the Financial Crisis!
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