Below is a case study for one of our clients, Grabber Construction Products. The case study highlights what Mihlfeld & Associates can do and has done to help unify the many locations that Grabber Construction Products has.
Joe Biden issued a new Executive Order on July 9, 2021, aimed at curtailing the skyrocketing transportation costs weighing heavily on manufacturers and retailers. Many organizations such as the National Retail Federation and American Apparel & Footwear Association have asked the White House to address the strain on supply chains. For example, the cost of transporting one shipping container has risen 195% in the past year and that is coupled with new fees and surcharges.
While the transportation industry is one of the more volatile industries, most experts can offer up a detailed 3-month forecast, an approximate 6-month forecast, and a hypothetical 12-month forecast. What many are saying for the remainder of 2021 and even into 2022 is the annual trends we have long witnessed are no longer valid. The question being pondered is, ‘can there be a peak season if the entire industry is already sitting in critical status?” The economy has the throttle set too high in nearly every industry and they all need freight moved. For months we have witnessed a surge in shipping that has remained at the highest level and that surge is expected to remain through all of summer, the fall, and into 2022. If the surge never subsides, how can one measure the peak seasons?
Many of the largest carriers have produced their 2021 Quarter 1 Earnings Statements and the prevalent theme is surprisingly good. The original estimates had the industry performing very well, however, they were quickly reduced in response to the crippling winter weather storms that covered all of the Midwest and Texas in February. It was a nice surprise that the adverse weather did not have a negative effect on the earnings of most carriers, overall. Just to name a few: Saia, J.B. Hunt, UPS, Old Dominion, & Ryder all posted higher-than-expected first-quarter earnings. Tight capacity coupled with businesses and consumers alike ramping up their spending spurred a large increase in demand keeping prices elevated and trucks running non-stop. The question now is whether or not the first quarter is indicative of what will happen for the remainder of the year.
Every Importer and Exporter has an eagle eye on Ocean Cargo rates right now. There are so many factors at play that even the best forecasters are hesitant to give hard numbers on what the next 30-60-90 days look like regarding pricing. The consensus is that they will trend up and below are the factors to watch.