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Labor Shortage And Surging Shipping Costs Are Biggest Drivers Of US Food Inflation

January 16, 2022

Labor Shortage And Surging Shipping Costs Are Biggest Drivers Of US Food Inflation

Setting aside the ever-present issue of the global supply chain crunch presently gestating in the PROC, where factories and ports are struggling with the most restrictive lockdown measures since the (Fauci-funded) “China virus” first burst forth out of Wuhan, the US is still facing serious shortages of workers and critical goods like foodstuffs and medicine.

The US labor market disappointed once again in December, while November’s similarly disappointing number was revised up only slightly. Meanwhile, those who are working are struggling with the fact that inflationary price pressures are hammering real wages. And regardless of what the Fed does next, it appears kinks in the economy created by COVID and the federal government’s response to COVID will continue to push food prices higher for the foreseeable future, as Reuters reports.

Already, growers across the West and Midwest are paying 3x the freight costs from before the pandemic – all to guarantee shipment of perishables like berries and lettuce before they spoil.

Some companies are even holding back on shipping certain goods (like long-lasting onions) to see if shipping costs might ease.

Shay Myers, CEO of Owyhee Produce, which grows onions, watermelons and asparagus along the border of Idaho and Oregon, said he has been holding off shipping onions to retail distributors until freight costs go down.

…click on the above link to read the rest of the article…

Shipping Container Price Surge Will Result in Increased Prices on Consumer Goods

November 25, 2021

Shipping Container Price Surge Will Result in Increased Prices on Consumer Goods

The United Nations Conference on Trade and Development (UNCTAD) announced that we should expect consumer prices to rise 1.5% on average over the next year due to the global shipping crisis. Inflation, fuel increases, and labor shortages are among the many factors that have caused shipping costs to spike. “UNCTAD’s analysis shows that the current surge in container freight rates, if sustained, could increase global import price levels by 11% and consumer price levels by 1.5% between now and 2023,” the UN reported last week.

This will impact consumers throughout the world. The US could see a rise of 1.2%, according to the UN, while China may see a 1.4% increase. Less developed countries could see costs skyrocket by 7.5%. According to CNBC, as of late October, over 600 shipping vessels were parked outside of ports worldwide as they are unable to offload. The UNCTAD expects prices on electronics to spike 11.4%, furniture and textiles by 10.2%, rubber and plastic by 9.4%, and basic electrical equipment by 7.5%. Even pharmaceutical products are expected to increase by 7.5%. There are no signs of this crisis improving anytime soon.

Shipping Costs, Trucking Rates Soar Despite Demand Below Prior Years. Now Add Diesel Price Surge to the Mix

February 20, 2021

Shipping Costs, Trucking Rates Soar Despite Demand Below Prior Years. Now Add Diesel Price Surge to the Mix

One more manifestation of the inflation pressures working through various levels of the economy despite suboptimal demand.

January, in terms of freight volume, is usually a slow month of the year, after the shipping season before the holidays, and freight rates tend to back off.  But not this January.

The amount that shippers, such as retailers and manufacturers, spent in January on shipping goods to their customers soared by 19.5% compared to January last year, the steepest year-over-year increase since 2011, and surpassing the surge in September 2018, according to the Cass Freight Index of Expenditures. This was driven by a mix of increasing freight volume and soaring freight rates. The amount spent on freight was roughly on par with December which had set a huge record:

The higher freight rates in January include trucking spot rates and contract rates. According to DAT Freight & Analysis, the average national contract rate for van-type trailers in January jumped by 26% from a year ago to $2.40 a mile.

Spot rates declined over the course of January from high levels in December before picking up again in February. But the average rate in January, at $2.36 was still up 11% from a year earlier.

The freight rates embedded in the Cass Freight Index jumped by 10.1% year-over-year in January, up from an increase of 6.0% in December.

The Cass Freight Index covers all modes of transportation, but truckload represents over half of the dollar amounts, followed by rail, less-than-truckload (LTL), parcel services, etc. It does not cover bulk commodities.

…click on the above link to read the rest of the article…

Massive Inflation in Shipping Costs. And the Reasons

January 18, 2021

Massive Inflation in Shipping Costs. And the Reasons

Rates for trucking, ocean containers, airfreight, parcels, you name it, the costs for shipping consumer & industrial goods are surging.

The dollar-amount spent by shippers, such as manufacturers or retailers, on shipping their goods jumped by 13% in December from a year earlier, driving the Cass Freight Index of Expenditures to a new record (red line). The amount spent on freight is a function of shipment volume and freight rates:

The Cass Freight Index covers shipments by all modes of transportation, but is heavily concentrated on shipments by truck, with truckload accounting for over half of the expenditures, followed by less-than-truckload (LTL), rail, parcel services, etc. It does not cover commodities.

The freight rates embedded in the index jumped by 6.0% in December compared to a year earlier. “Based in part on spot trends, the acceleration in freight rates is likely to persist in the coming months,” Cass said in the report.

Shipment volume surged 6.7% year-over-year, given the Pandemic shift in consumer spending to goods that need to be shipped, from services that are not shipped. But shipment volume in December (red line in the chart below) remained below the levels of 2018 (black) and 2017 (brown) at this time of the year:

While Americans have cut back buying services, and spending on services remains sharply lower year-over year, they have been buying all kinds of goods, and many categories in record quantities, to where periodic supply shortages have cropped up here and there since March, ranging from hot-tubs to low-end laptops.

Retail sales (goods) in December rose by 4.8% from a year earlier to a record $620 billion (“not seasonally adjusted,” red line in the chart below). Everyone got sidetracked by the dip in “seasonally adjusted” retail sales. That dip was likely due to seasonal adjustments that had gone awry, particularly for ecommerce, due to the massive distortions in spending during the Pandemic:

…click on the above link to read the rest of the article…

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