The Supply Chain Is Mostly Fixed

But Cost of Shipping Is Still High 

The supply chain, a major headache during the pandemic economy, is now in much better shape. According to Bloomberg:

“Containers that took up to 120 days to ship between warehouses in China and the US during the pandemic now take about 14 days, and the spot price for shipping a container from China to the US has declined from a peak of about $20k to about $1.2k, roughly equivalent to pre-pandemic prices.”

So why is the cost of shipping still so high?

For one thing, the costs of goods shipped to the US from Europe are still three times what they were before the pandemic. For another thing, shipping prices are usually determined by long-term contracts, so many importers are locked into rates set in 2021 and 2022.

Also…

* The cost of storage and truck and train shipping within the US is still high.

* Warehouse vacancy rates are low, pushing up rents.

* The logistics sector has struggled to hire and retain employees, which has led to higher salaries.

* The price of diesel fuel is twice what it was in the summer of 2020.