In the world of two-day shipping, we expect our new shoes or our cookbook to be sitting outside our front door when we get home. Half the time, we expect our packages the day before they’re scheduled. Online shopping is engrained in our society and our way of life. What has changed of late? The United States is experiencing massive shipping delays for retail and commercial goods. What’s causing this industry-wide delay?
Covid-19 has complicated the once simple combination of people, trucks, and the supply of goods.
Truckers are the backbone of the industry. Without someone to drive the trucks, it doesn’t matter if the routes are calculated perfectly or if the most efficient packing methods are used. According to the American Trucking Association In 2019, the United States was short 60,000 drivers needed to meet the needs of American shipping, and we are expected to be short upwards of 100,000 drivers by the year 2023.
With closures due to COVID-19obtaining proper licensing became difficult as access to trucking school programs became scarce. Despite the offer of sign-on bonuses, more benefits, and better pay, we aren’t seeing a boom in the trucking career path. Commercial trucking companies have even started discussing if lobbying to change the commercial license age from 21 to 18, hoping that more younger people would join the industry.
Retail goods ordered via online shopping sites has drastically increased in the last 18 months. The US department of Commerce reported that 2020 saw in increase of 32.4% in online retail sales compared to 2019, and all these items must be delivered.
We take for granted that trucks will always be available to haul any load we need, and for the average person, they might not even think about it at all. The lockdown prevented truck manufacturers from introducing new semi-trucks into the economy. With a disrupted supply chain, 2021 will only see around 18,000 to 29,000 new class 8 vehicles built, according to the Federal Travel Regulation (FTR). We were expecting upwards of 350,000 new trucks.
So, let’s just fix the trucks we currently have! The problem is, parts are few and far between. This shortage is two-fold. Manufacturing of goods are lower than normal due to Covid-19 closures and manufacturers are trying to catch up, but the raw goods are not readily available for purchase. Steel and rubber prices have increased across industries, affecting suppliers’ ability to purchase material at a typical price. This, in turn, caused the price of items like tires, engine oil, and brake chambers to skyrocket, if trucking companies can even find these items in stock.
The Supply of Goods
Summer of 2021 showed the world just how important proper logistics, routes, and skillful drivers are for the shipping industry. When the 1,300-foot cargo ship blocked the Suez Canal for 3 months, it caused worldwide delays for not just consumers, but also for suppliers.
The largest port in the United States is located in Los Angeles/Long Beach. A record number of cargo ships, 49, were quarantined in the bay on August 29th. This broke the previous record of only 9 ships held off the coast on June 18th. The Los Angeles port does not have enough space for all the ships to dock.
This has caused freight rates to spike to levels we have never seen before. CNBC reported that a single container of goods would of cost on average $1,500 to ship from Shanghai to Los Angeles now costs upwards of $30,000. We are already starting to see this affect the price of consumer goods, and it will likely continue to rise between now and 2023.
What does this mean as a consumer?
We will see a price increase for shipment of items. The days of guaranteed free-shipping are fading into the distance. While giant online retailers might be able to maintain complimentary shipping, the average business will likely change it’s free-shipping policy or increase retail prices to keep up with the cost of shipping. FedEx has already increased domestic shipping rates by an average of 4.9% in anticipation of increased holiday season sales. Other shipping providers will likely do the same.
Expect to see longer shipment times, especially going into the winter months. In our industry, we are seeing anywhere from a 1 to 2-week delay in securing secure transportation with a freight truck or semi-truck. Ideally, we would love to see a quick turnaround, but it is unfortunately not possible in the current climate. This is affecting every industry, and will likely get worse in the coming months with the increase in online retail shopping for the holidays.
What can you do as a consumer? Plan ahead. If you plan on purchasing your kids the video game that have begged for all year or investing in the fine china to host holiday parties, order early. Nobody wants the frustration that comes when items are out of stock or show up a week late. Ultimately, we all want to see increased shipping times, so be patient with your orders and plan ahead.