Shipping costs and delays expected to increase, experts say

Higher shipping costs and longer delays are expected to spike through the end of the year as Wisconsin’s lack of intermodal systems and labor shortages hamper state companies, experts said.

“No one expects any kind of relief until well into 2022 — maybe as long as it goes into the second quarter of 2022 — before things can stabilize a little bit and you know we recover from this backlog,” said Sandi Siegel, the president of logistics company M.E. Dey & Co. Siegel also is the co-host of the video podcast “Talking Trade.”

Logistics experts discussed rising surcharges, long wait times and potential solutions to state- and nationwide shipping challenges at a virtual MMAC World Trade Association webinar yesterday. 

“The pandemic has created havoc for the supply chain,” Wisconsin Department of Transportation Secretary Craig Thompson said. “Even though there are signs that are hopeful that Wisconsin is gradually emerging from COVID-19, there are still a lot of uncertainties from the freight logistics industry.”

The potential for intermodal transportation hubs, sites for products to switch from one form of transportation to another, to be built in Wisconsin was met with excitement from the panelists. Thompson suggested pending federal infrastructure legislation could help.

The state’s lack of such facilities means a lot of companies ship products through Chicago, which has become a shipping bottleneck, the experts said.

The state DOT formed an advisory committee to identify locations to place intermodal transportation hubs in 2019. The committee, which went on hiatus during the pandemic, will begin meeting again in August.

Labor shortages, especially in the skilled trades and trucking, are a major contributor to the backlog. Transportation companies are struggling to find people to keep facilities running, said Sen. John Jagler, R-Watertown, chair of the Legislature’s Committee on Housing, Commerce and Trade. 

“No one has a silver bullet,” Jagler said. “It also goes back to a lot of the issues that we have in every industry in Wisconsin and that is the labor shortage. The lack of people reports to a lack of transport to a lack of production.”

Wisconsin needs to rethink its current transportation method to solve its current problem, according to Logistics Council President Steve Rose. Rose is also strategic sales director for Redwood Logistics, a software company. He proposes systems become digitized to save companies money and compensate for labor shortages.

“The old way has to change,” Rose said.

Companies are facing surcharges as much as $2,000 to bring products to the Midwest, Siegel said. She expects the number to increase as peak shipping season, which typically runs from September to December, approaches.

Since the pandemic, approximately 20 to 30 ships are waiting to be unloaded at the Port of Long Beach at a time, Brady Corporation Logistics Manager Adam Schneider said. Similar situations can be found at ports on the country’s East and West coasts.

Companies like Brady Corporation, a manufacturer of workplace supplies, are left waiting nine weeks or more, which is double the amount of time it was before the pandemic, according to Schneider.

“We’re basically writing blank checks right now,” Schneider said. “We want things to move, and we’re willing to pay to get it done. That was the most frustrating aspect about this whole scenario: we were willing to pay ridiculous rates and surcharges and we still had to sit and wait our turn.” 

The additional expenses incurred by companies will be reflected in the price consumers pay for products, Schneider said. 

Panelists warned that things would get worse for companies before they begin to improve.

“We just have to bite down and take it right now,” Jagler said.

See a slide presentation from Rose: 

Check out the “Talking Trade” video podcast: 

And see more at the Trade Policy page: 

— By Lauren Breunig