Mon. Oct 18th, 2021

Wayne Kaylor knew his truck was parked somewhere in a Chicago railroad yard. He just did not know where, and for 78 days no one could tell him.

Thanks to the brilliant consumer demand, American railways, ports and warehouses are clogged with cargo, with too few people to move it fast, causing delays and rising prices for businesses and consumers. Kaylor is the head of Way Interglobal, a distributor from Elkhart, Indiana, which sells refrigerators, stoves and other appliances to large-scale RV manufacturers such as Winnebago Industries. From May 4 to July 21, Kaylor’s cargo hold with dozens of electric fireplaces got lost in the swing.

“It’s crazy,” he said, noting that the delay had sold the business. “Although everything was marked with GPS, they lost it in the railway yard.”

The ports in California in Long Beach, Los Angeles and Oakland reported delays earlier this year, and the Union Pacific and BNSF railroads made it clear this month that the problem had reached the interior. UP stopped cargo shipments and BNSF began surveying as the railroads moved to clean their Chicago subway sites of containers that, like Kaylor, were inaccessible.

Manufacturers pay surcharges and complain about lost business, while industrial conglomerate Honeywell International blames supply chain problems for revenue of up to $ 200 million. Retailers struggle to get enough products to sell holiday season, with large chains ordering larger quantities of stock than usual, hoping that at least some of them arrive on time.

“The global supply chain is not built for this,” said Brian Bourke, chief growth officer at Seko Logistics in the Chicago suburb. ‘They are built annually for seasonal increases in demand. If you have 12 high seasons in each mode, things start to break down. ”

CH Robinson, a logistics company in Minnesota, said the oversupply exacerbated the disruption to shipping. Goods coming from China are delayed 15 to 20 days after their arrival in US ports, and according to the company, up to a quarter of the intermodal shipping containers are not available because some are used as temporary storage.

Ports on both U.S. coasts are under pressure. Long Beach moved more than 907,000 containers in May, the highest number since 1995. Nine of the port’s ten busiest months in the past quarter-century have come in the past 12 months. Across the country, the port of Savannah, Georgia, has moved 5.3 million containers for the 12 months to June 30, a record for the port and 20 percent more than the previous financial year.

“I do not think there is a port in the country that has not been affected by congestion,” said Todd Tranausky, a transportation analyst at FTR.

At the railroads, aggressive running of businesses left the necessary staff to handle the increase in demand, Tranausky said. Prices have risen, with shipping prices up to 15 percent higher than a year ago. Although he predicted that the increase would slow in the second half of the year and in 2022, “it will by no means be a transport market”.

Buyers are already feeling the impact. With rising costs, companies making everything from tissues to salad dressings have raised prices to help make a difference. U.S. consumer prices rose 5.4 percent in June from a year ago, a fresh 13-year high after rising 5 percent in May, according to the U.S. Bureau of Labor Statistics.

Procter & Gamble, the company behind Tide detergent and Gillette razors, plans to raise prices on some of its products after warning of a $ 1.9 billion tax after the coming year due to higher commodity and freight costs.

Colgate-Palmolive is also asking for more. “Logistics networks are being taxed, whether it’s the trucks and storage here in the US or sea freight coming from Asia to the rest of the world,” CEO Noel Wallace said Friday.

General Mills, known for Cheerios cereals and Haagen-Dazs ice cream, said it was raising prices in most of its grocery categories and world markets, citing in part the rising delivery costs. Price increases have also been implemented by Conagra, the company behind Chef Boyardee pasta and Orville Redenbacher popcorn, toy manufacturer Hasbro and motorcycle manufacturer Harley-Davidson.

Kleenex’s parent, Kimberly-Clark, said he made a decisive decision in June and in the early part of the third quarter to raise prices to compensate for inflationary pressures, after announcing earlier that he would raise prices on a range of consumer goods such as baby care products and Scott will increase. toilet paper. In some cases, the company has increased prices by double digits.

CEO Mike Hsu said Kimberly-Clark faces “significantly higher” costs, which the company attributes to higher prices for materials such as pulp and distribution costs.

“Since we spoke in April, commodity inflation has risen and our supply chain has been challenged,” Hsu told analysts.

Although strong demand has given businesses the space to raise prices, we still need to see how long people are willing to pay up. Hsu noted that other industries have observed a decrease in spending, which could leave customers extra money in their wallets for consumables.

“However, consumers are facing a broader inflation in this environment in all categories outside consumer goods,” a trend that ‘makes it a little more challenging,’ Hsu added. Sean Connolly, CEO of Conagra, said the ‘ubiquity’ of price increases in grocery stores and restaurants could ease the demand for mitigation.

For Kaylor, the math is simple. A cargo container fits 79 electric fireplaces. A year ago it cost to send $ 4,500. If his business can get even one, $ 20,000 is a good deal. That’s almost $ 200 more per fireplace.

“So you notice at your client, and it becomes a drop effect,” he said. “It’s really a problem for everyone.”

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