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High trucking costs are expected to last through 2021, adding to retailers' challenges

Published by Business Insider on Mon, 03 May 2021

<p><img src="https://static1.businessinsider.com/image/5c3ce2a3bd773050b12e62d4-2400/2018-04-04t204429z1947511422rc1ca12ebb50rtrmadp3usa-trade-china.jpg" border="0" alt="semi trucks" data-mce-source="Bob Riha Jr./Reuters"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Retailers are sounding the alarm on increasing transportation costs as truck drivers and new trucks are in short supply, <a href="https://www.wsj.com/articles/truckers-expect-u-s-transport-capacity-crunch-to-persist-11619956801'mod=pls_whats_news_us_business_f">the Wall Street Journal reported Sunday.</a></p><p>The higher costs are expected to last at least through the end of the year, the Journal said. US freight demand rose 3.4% in March from February, as trucking costs rose 6.5%, almost twice the rate, the paper reported, citing data from Cass Information Systems.</p><p>Rising freight costs have been a problem since last year. At the time, trucking companies began offering <a href="https://www.businessinsider.com/truck-driver-pay-record-high-coronavirus-2020-9">huge wage increases</a> to attract drivers to the industry. The lack of drivers has since been complicated by a <a href="https://markets.businessinsider.com/news/stocks/global-chip-shortage-4-experts-predict-how-long-affect-markets-2021-4-1030295270">semi-conductor shortage</a> keeping new trucks from coming on the market, the Journal said.</p><p>"It's just been this constant increase in the cost of purchased transportation at a rate that's really something that we've never seen," Bob Biesterfeld, chief executive of C.H. Robinson, told the Journal.</p><p><em><strong>Read more: </strong><a href="https://www.businessinsider.com/trucking-stocks-to-buy-for-economic-recovery-transportation-boom-bofa-2021-3" data-e2e-name="inline-read-more-link">Bank of America names 5 trucking stocks to buy as the economy recoversand explains why the industry is perfectly positioned to benefit from the boom ahead</a></em></p><p>For retailers, that adds to their supply chain woes from <a href="https://www.businessinsider.com/cargo-ships-waiting-to-dock-california-contributes-supply-chain-crisis-2021-4">backlogged ports</a> and <a href="https://www.businessinsider.com/plastics-shortage-texas-freeze-storm-uri-fight-for-materials-2021-3">repercussions from the Texas winter storm</a>.&nbsp;</p><p>"We contended with a fair amount of challenges as well, including port congestion, the impact of Texas storms on raw material availability, a significant rise in inflationary costs, freight challenges as well as demand spikes across many categories,"&nbsp;Ravi Saligram, chief executive of Newell Brands, which owns Sharpie and Crockpot, among other brands, said on an April earnings call.&nbsp;</p><p>Bed Bath &amp; Beyond and General Mills also warned investors of the rising price of freight on their earnings calls recently. General Mills CDO Kofi Bruce said the company is seeing mid-single-digit inflation in freight costs, making the price of delivering to customers higher.</p><p>Gustavo Arnal, Bed Bath &amp; Beyond's chief financial officer, said the company saw an "unfavorable impact" from higher shipping costs.</p><p>"We continue seeing previously communicated industry-wide headwinds from freight costs," Arnal said on the April 14 call.</p><p>Retailers across the country have begun raising prices on goods from <a href="https://www.businessinsider.com/household-products-coke-toilet-paper-diapers-coffee-tampons-price-increase-2021-4">toilet paper to diapers</a> to offset shortages and shipping costs, Insider previously reported. <a href="https://www.businessinsider.com/household-products-coke-toilet-paper-diapers-coffee-tampons-price-increase-2021-4">Cars, bikes, electronics, and houses</a> have become more expensive, too, as the supply chain remains in disarray.&nbsp;</p><p><a href="https://www.businessinsider.com/trucking-shortage-transportation-inflation-high-transportation-costs-through-year-2021-5#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/why-kolinsky-sable-brushes-are-so-expensive-england-art-painting-2019-12">Why kolinsky sable paintbrushes are so expensive</a></p>
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