Item out of stock? On back order? It might be stuck in a container at a port or still waiting for pickup because of an ongoing global shipping backlog. And when your long-awaited item finally does arrive, you will likely be paying more for it.
It’s a common story right now: Shippers, like many other industries, are having trouble keeping up with demand for goods and services. So not only are consumers waiting longer to receive their stuff, but they are likely paying higher prices as businesses pass on some of their soaring shipping costs to their customers.
The price for a shipping container to hold the items in transit (which is only one part of transportation costs) has surged. Drewry’s composite World Container Index, which measures the price in U.S. dollars of a 40-foot container, rose 4.1% during the week ended June 19 and was up almost 300% from the year-ago period amid a container shortage.
The chart below shows how fast shipping container costs have climbed.
When the pandemic struck and businesses closed around the world to slow the spread of COVID-19, shippers also scaled back, not knowing how many goods would be produced for shipping or what the demand would be. However, being stuck at home prompted consumers online to order stuff, and lots of it. Initially, that just depleted inventories of things like bikes and home furnishings. But with the reopening of some parts of the economy in the latter part of 2020, consumer spending for goods rose further and businesses had to restock, increasing pressure on shippers and demand for containers.
That, coupled with a labor shortage at the ports to unload and reload, prevented containers from moving fluidly back and forth between producers and buyers all over the world, leading to a container shortage and higher shipping prices.
And things could get worse. A recent uptick in COVID-19 cases in China caused the government there to close parts of the southern Guangzhou province, which disrupted port services and delayed deliveries, driving up costs again.
On Tuesday, the National Retail Federation (NRF) requested a meeting with President Joe Biden to discuss shipping issues. The NRF said it surveyed its members and they said the most common challenges were U.S. port congestion, lack of carrier capacity, and lack of available containers overseas. All respondents said their costs have increased, with 75% of them having had to pass along some of the costs to consumers, and 85% of them experiencing inventory shortages because of ongoing supply chain disruptions, the NRF said.