Rising Shipping Costs Pose New Hurdles for Grocers
Although grocers are a vital part of our society, their role doesn’t protect them from the impact of global supply chain issues. Especially when the world is faced with shipping constraints that are causing unprecedented increases in the costs to move food and household goods.
In fact, grocers and other retail outlets are the hardest hit in most scenarios that impact the economy. After a tumultuous 2 years, the economy is trying to correct itself and many grocers are struggling through that process. While dealing with fighting to meet demand due to a few different factors, they are watching shipping rates skyrocket.
In this article, we will take a look at what most grocery stores are facing as rates rise and the economy attempts to stabilize. We will also discuss why prices continue climbing as empty shelves become a more common sight.
Lastly, we’ll examine some of the trends grocery stores face to gauge the challenges they’re up against.
Even products as simple as ground beef saw a 17% price increase from November 2020 to November 2021. This increase is despite the average American already consuming 275 pounds of meat per year. Along with it, shipping costs increased more than double the pre-pandemic rates.
Due to the hyperinflated rates of reefers, prices in grocery stores across the country are high while inventory runs consistently low. Fortunately, US consumers are willing to pay the higher prices if it means getting their favorite perishable food items. Moreover, grocery shoppers face an inconsistent supply of meat and an absence of other items once prevalent. This means that when they do find their favorite goods, the difference in price is justifiable.
In addition to the increase in shipping costs, fresh vegetables are also experiencing historically high prices, such as onions, which have risen nearly 70% since the pandemic began. Although greens have a relatively low reliance on refrigerated shipping, they are still subject to a general bottleneck that may delay certain vegetables by three weeks or more. This is not ideal for perishable goods, especially perishable goods that now cost more.
A major problem facing grocery retailers is overall supply chain instability. Further, migrant workers face restrictions that exacerbate the labor shortage and destabilize entire workforces even more. Some farms are even finding it difficult to harvest and package crops due to the labor shortage, let alone thinking about shipping anything.
In the same way that perishable goods are affected by scarcity, paper products are also affected. This is the case with bath tissue disappearing from grocery stores and other retail store shelves in 2020, an issue that is still affecting several retailers to this day.
Shipping delays and material shortages are having a large effect on these types of products. This comes in unexpected ways such as the sudden scarcity of first-cycle products. This alone has resulted in customer preferences changing in favor of recycled products as they are in abundant supply at the moment. This is a positive shift toward influencing more companies to reimagine their sustainability practices.
Rates are rising in an effort to cover rising shipping costs that companies were eating during the pandemic. To offset those, they have had to pass the cost on to consumers. As a result, even those environmentally friendly items are seeing prices far higher than the “premium” alternative before the pandemic
Shipping rates will remain high until Q2 2022, so local stores will continue to deal with shortages and high prices for a while longer.
A new generation of Class 8 reefer trailers will roll off assembly lines after the passage of H.R. 3684. Once that happens, there will be a boom in newly-certified drivers. In turn, this will allow the flow of food to be enough to feed the nation’s growing demand. Revitalizing the workforce in this way is not only beneficial to the food shippers, but it is also a step in the right direction for the nation’s supply chain.