Companies Rely More on Expedited Freight Due to Inventory Delays
By Dan Boaz
Problems with supply chain management during the first half of 2021 forced organizations to utilize expedited freight services to ship and receive inventory. As COVID-19 restrictions are lifted across the U.S. after more than a year, companies are struggling to catch up.
In addition to the pandemic, a shortage of delivery drivers is leaving businesses with even fewer shipping options. As a result, the North American retail industry has increased its use of expedited air freight shipping services to handle supply chain bottlenecks as the demand for consumer goods continues to rise.
This disruption is impacting numerous industries—clothing and shoe brands such as Levi Strauss, Lands’ End, Tommy Hilfiger, Crocs, and Calvin Klein are opting for services such as air freight to move their goods, resulting in operational cost increases and extensive delays. Fitness equipment manufacturer Peloton was also forced to utilize different shipping solutions, turning to air freight and expedited ocean shipping to transport its luxury stationary bikes and exercise equipment.
Software companies Microsoft and Qualcomm, electronics manufacturer Sony, and electric vehicle producer Tesla face similar concerns about meeting consumer demand due to supply chain interruptions. Some businesses say that they don’t expect to resolve these issues until the end of 2021.
An Increased Need for Expedited Freight Services
Last year, COVID-19 lockdowns led to the worldwide closure of manufacturing facilities and brick-and-mortar retail stores. This combination of reduced inventory and less in-person commerce negatively impacted various forms of freight transportation.
But in the U.S., multiple economic stimulus checks and unemployment payments from the federal government resulted in a desperate need for more truck drivers. As pandemic lockdowns and restrictions ease up, retail stores, grocery chains, and mass retailers need products fast. Air travel restrictions have also been lifted, leading to a wide array of demands that hadn’t been seen since March 2020.
According to a recent survey conducted by the National Retail Federation, nine out of 10 retailers are currently experiencing some type of shipping delay. More than 97 percent have been negatively impacted by port and shipping disruptions surrounding international deliveries, including port congestion in the U.S., carrier capacity deficits, and a lack of available shipping containers overseas. These delays could last anywhere from 4-6 weeks, with 70 percent of businesses adding an average of 2-3 weeks to their supply chains.
Eighty-five percent of respondents say these inventory shortages are happening due to ongoing supply chain bottlenecks.
“North America had a driver shortage even prior to COVID-19, which caused everything to slow down and drivers to go on unemployment,” AirFreight.com CEO and President Dan Boaz said. “Many truck drivers do not want to return to their jobs away from family, so we now have a massive driver shortage. This has led to an increased trucking rate on top of increased fuel prices.”
These shipping cost increases are impacting consumers—75 percent of companies have had to offset their costs by charging customers more.
Expedited Freight and Supply Chain Solutions
Unfortunately, the inventory delays currently hampering companies aren’t likely to resolve themselves anytime soon.
"Government stimulus checks have encouraged public spending on goods and services,” Boaz explained. “This has created a pent-up demand that’s increasing the cost of production. Small and midsize companies are now short on supply, so they have to turn to expedited transportation to keep up, which increases their freight cost. This is now the perfect storm for inflation in the trucking world. It will be a very long time before rates return to pre-COVID levels, and they may never return. These increased costs will inevitably be passed along to the consumer."
With supply chain disruptions on the rise and no end in sight, how can retailers and other businesses offset the costs of reliable expedited shipping services via land, air, and sea? Combining shipments, utilizing all of the space available in ground or air vehicles, and planning ahead to avoid potential inventory issues can mitigate the higher cost of transportation.
Resolving Your Supply Chain Issues
AirFreight.com can meet the ever-growing shipping needs that North American companies are currently facing, helping small businesses, large organizations, and retailers transport goods quickly and seamlessly via expedited shipping.
AirFreight.com led by Dan Boazoperates as a global provider of premium freight services in a best-in-class segment of the expedited transportation industry.
Our services include: Air Freight, Air Cargo, Air Charter, Expedited Ground Transport and Just in Time Delivery for the Time Critical Shipping Business. Contact us today to have an Air Freight expert assist you or complete our freight quote form to get started.
Subscribe for More Updates
Enter your email address to subscribe to this blog and receive notifications of new posts by email.