September 17, 2021

LOCKDOWN FALLOUT: Rising Shipping Costs Are Companies’ Latest Inflation Riddle.

Transportation costs—typically a fraction of a finished product’s price—are emerging as another supply-chain hurdle, overwhelming some companies already paying more for raw materials and labor.

The fabric and crafts retailer Jo-Ann Stores LLC said it has spent 10 times more than its historical cost in some cases to move products from one point to another.

“Sometimes the ocean freight now is actually more expensive than the cost of the product,” Chief Executive Officer Wade Miquelon said in a recent interview. The company hasn’t raised any base prices and is hoping the extra supply-chain expenses are temporary. “I think they probably are, but does transient mean six months or 24 months?” he said.

“We are not counting on material improvements in 2022, especially in the first portion of the year,” Michael Witynski, CEO of the discount retailer Dollar Tree Inc., DLTR 0.94% said last month. He noted that experts expect ocean-shipping capacity to normalize no later than in 2023.

The longer the supply chain, the easier it is to disrupt — and the longer it takes to unravel.

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