Joyce Brenny, chief executive of Brenny Transportation in Minnesota, gave her truck drivers a 15 percent raise this year, but she still can’t find enough workers for a job that now pays $80,000 a year.
A year ago, when customers would call Brenny, she could almost always get their goods loaded on a truck and moving within a day or two. Now she’s warning customers it could take two weeks to find an available truck and driver.
Shipping costs have skyrocketed in the United States in 2018, one of the clearest signs yet of a strong economy that might be starting to overheat. Higher transportation costs are beginning to cause prices of anything that spends time on a truck to rise. Amazon, for example, just implemented a 20 percent hike for its Prime program that delivers goods to customers in two days, and General Mills, the maker of Cheerios and Betty Crocker, said prices of some of its cereals and snacks are going up because of an “unprecedented” rise in freight costs. Tyson Foods, a large meat seller, and John Deere, a farm and construction equipment, also recently announced they will increase prices, blaming higher shipping costs… (more)
Housing is not the only inflationary cost of living index we have to worry about. The costs of goods is going up in an inflationary spiral that is being driven by higher fuel costs and lack of labor. Passage of bills that raise the cost of diesel and bridge tolls will make matters worse. We suggest that voter vote No on RM3 and support the repeal of the gas tax to cool things down a bit.
Economists warn those costs are almost certainly going to end up resulting in higher prices for everyday items that many Americans purchase.
“Every single good ends up on a truck at some point. Businesses that use trucking to receive and ship goods are going to do their best to pass on the costs to the rest of us,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.
Logistics and transportation accounts for about 10 cents of every dollar in the U.S. economy, says Donald Broughton of Broughton Capital and author of the Cass Freight Index publication.
“I don’t normally speak in hyperbole, but we’re entering some uncharted territory,” Broughton said. “If there is a 10 percent increase in transportation costs, that gives you a 1 percent increase in inflation for the broader economy. That’s real.”
It could mark a turning point for the U.S. economy. Inflation has stayed unusually low in the past decade, largely because costs have stayed low for food, clothes and other items Americans buy in store or online as companies got more efficient and worker wages barely increased. But rising shipping costs could change that dynamic in 2018, potentially forcing people to have to spend more and employers to hike pay as they try to compete for workers with the trucking industry… (more)