The economic rebound from the pandemic created a chaotic freight nightmare. Those days are behind us, but new factors are beginning to drive freight costs back up again, both for bringing goods in from Asia to the US, as well as sending freight within the US. Here are some causes:
Labor – The feared UPS strike was averted at the last minute through a deal with will significantly increase wages for UPS. UPS is expected to increase rates to cover the increased labor costs. Similarly, the Longshoreman at West Coast ports negotiated increased wages with the port operators. This will increase freight costs on US imports from Asia.
Container Prices – The Wall Street Journal reported that the spot rate for a 40-foot container from China to the US increased 61% this Summer. While this is nothing compared to the spike 18 months ago, it may start increasing freight costs from China.
Panama Canal – Water levels in the Panama Canal are at record lows. This is a critical route for freight from Asia to the US East Coast. The low water levels are causing ships to back up, offload freight to get through, or reroute around South America. Reuters reports this is increasing some spot shipping rates by 36%.
All of these factors are expected to create increasing freight costs in the months ahead. Read the full story here.