Amid supply chain bottlenecks gripping the United States economy, firms are dealing with shipping costs that have increased by several hundred percentage points.
During an interview with CNBC, Jeremy Andrus — the chief executive of Traeger, a grill company — explained that his firm is seeing diminished profits due to the cost of shipping.
“Bringing a 40-foot container from Asia to the U.S. twelve months ago was about $1,500. Today, you’re spending upwards of $30,000 and we’re certainly averaging close to $10,000,” Andrus said, implying that typical shifting costs have increased by over 550%. “Our inventory is big and heavy. It takes up a lot of container space, and so we are particularly sensitive to transportation costs.”
“We’re sensitive to a near-term shift. The world will right-size itself, in terms of these costs, and we will see some significant flow through to the bottom line,” Andrus said. “But right now, we are driving the brand. We are thinking about the engine, the brand health.”
As The Daily Wire previously reported, Goya Foods CEO Bob Unanue raised similar concerns during an interview with Fox Business.
“We bring products like coconut water from Thailand [and] from Vietnam and a container with about 1,300 cases of coconut water in it used to cost about $1,800, $1.40 a case; it’s gone up to $20,000 to get on a container ship if you can,” he explained, indicating that shipping costs have risen by over 1,000%.
“We’re vertically integrated,” said Unanue, adding that the cost of packaging materials has skyrocketed.
A recent report from the United Nations Conference on Trade and Development said “container ship carrying capacity, container shortages, labour shortages, continued on and off COVID-19 restrictions across port regions and congestion at ports” could lead to consumer price hikes through 2023.
“Manufacturers in the United States rely mainly on industrial supplies from China and other East Asian economies, so continued cost pressures, disruption and delays in containerized shipping will hinder production,” said the organization. “A 10% increase in container freight rates, together with supply chain disruptions, is expected to decrease industrial production in the United States and the euro area by more than 1%, while in China production is expected to decrease by 0.2%.”
Among the predicted price hikes for consumer goods were:
- Computer, electronic and optical products — 11.4%
- Furniture; other manufacturing — 10.2%
- Textiles, wearing apparel and leather products — 10.2%
- Rubber and plastic products — 9.4%
- Basic pharmaceutical products and pharmaceutical preparations — 7.5%
In a letter to President Joe Biden, fifteen Republican governors argued that the administration’s COVID-19 vaccine mandate and other regulations are worsening the supply chain crisis.
The governors “commit to using our authority where allowable to modify weight, size, or load restrictions to allow more cargo to move more efficiently; adjust hours of service constraints to provide truck drivers more time and flexibility; deregulate education and occupational licensure barriers to get more commercial truck drivers on the road.”
They likewise vowed to “convene state agencies in transportation, commerce, workforce, and other related fields to coordinate with private industry, local governments, and neighboring states where appropriate to ensure greater efficiency, connectivity, and data sharing among shippers and receivers at ports, distribution points, storage facilities, and other intrastate corridors for the expedited loading, unloading, and transport of freight.”
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Source: Dailywire
