Higher shipping expenses for business are forcing companies to pass the extra costs on to consumers., says an article published in BloombergQuint.
The immense hike in prices
The price for a container of goods from China to the U.S. West Coast and European ports have stopped near record highs for several months.
The contract rates along the bellwether trade lane linking Asia with North America, are coming in around $2,500 to $3,000 for a 40-foot container which are 25% to 50% higher than a year ago.
Nation supply channel catches attention of Federal Reserve officials
According to minutes of the central bank’s Federal Open Market Committee meeting, “While there are signs of solid factory activity in the coming months, reports of shortages in materials and labor, as well as bottlenecks in transportation, signaled some potential restraints on the pace of the manufacturing recovery.”
“We’re going to have a conversation about inflation. If we see it, it’s going to have to accelerate the Fed.” said Jim Bianco, president and founder of Bianco Research, during an interview with Bloomberg Television.
CEO of Kent Cycle and Fairfield on hurdles caused due to expenses
The higher shipping costs have been sparked by a combination of factors, including soaring demand amid stimulus checks, saturated ports, and too few ships, dockworkers and truckers, causing significant headaches for business owners.
Kamler said in an interview, “I’m describing our businesses here as like trying to play Whack-A-Mole. You fix one problem and then something else pops up.”
New Jersey-based bike producer, Fairfield, which employs 225 workers and imports its parts from Asia said, “his shipping costs have more than doubled in recent months. On top of that, truckers are regularly missing appointments to pick up merchandise from warehouses, while a lack of parts is keeping production from meeting demand.”
A never known price increase
Gordon Downes, CEO of the New York Shipping Exchange, an online cargo platform said, “larger businesses can often secure better shipping rates thanks to the size of their orders. Smaller ones, however, are at the mercy of spot rates and price increases. Especially if you’re not in a really big shipper that has a very sophisticated negotiating process and a lot of leverage, you’re forced to accept these contracts.”
Kent’s Kamler said that normally he’d be extremely stressed out by the high shipping costs and a lack of parts. “The only saving grace is that all my competitors are in the same boat,” he said.
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Source: BloombergQuint
