Shipping, Logistics Costs Expected to Keep Rising in ‘22 

The price of shipping and logistics for companies is not expected to ease in the new year as the challenge to deliver products endures amid the pandemic. 

Delivery and logistics providers are reportedly seeking big price increases for new contracts, a sign that inflation, strong demand and limited capacity at freight yards are likely to continue, The Wall Street Journal reported. 

Because the demand for shipping outweighs capacity in the freight sector, experts say transport operators see a window to up prices as they negotiate new contracts.  

Executives from ocean shipping firms said they expect rates to double in new annual contacts compared to deals signed earlier this year. At the start of the year, supply chains had not been squeezed. 

Every part of the freight sector has seen an uptick in prices, including trucking, parcel delivery, shipping by ocean and warehousing.  

“I think folks are a little shell-shocked at the moment,” said Todd Bulmash, a logistics executive and board member at the Council of Supply Chain Management Professionals. “They’re preparing for the worst.” 

Cass Information Systems, the St. Louis-based provider of integrated information and payment management solutions, reported domestic shipping costs for transporting goods by railroad and highways in the U.S. have seen a 23% increase this year, compared to 2020. 

The Logistics Managers’ Index, a tracker of logistics prices, including transportation, inventory and warehousing, reached record levels in November from October, up 3.4% and 14% year-over-year.  

The other factor that has led to skyrocketing prices is the cost of labor in what has been a tight labor market as employers compete for workers. 

“As long as we have underlying inflation across the economy, you’re going to see that inflation reflected in the cost of goods and services to include trucking,” said Derek Leathers, chief executive of Werner Enterprises. 

He said rates could rise as high as mid-double-digit percentages in 2022. But price hikes will moderate in 2023 as the demand for transportation cools and companies restock depleted inventories. 

On the consumer side, giants FedEx Corp. and United Parcel Service have said rates will increase an average of nearly 6% in 2022. That represents the first time since 2013 that the shipping leaders have seen annual increases above 5%.