Costs of doing business in the disposable glove market seem to be leveling off after several years of big swings. United Parcel Service and the Teamsters reached a deal to avoid a strike by getting the raises the drivers wanted. Thus, higher labor costs will likely affect the price of most goods they transport.
The International Longshore and Warehouse Union and Pacific Maritime Association also forged their own deal after months of labor strife; you can expect that agreement to eventually factor into product costs as well.
Container ocean freight rates oscillated dramatically between January 2020 and June 2023. In 2021, the market saw an especially steep increase in global freight rates, reaching an average price of $20,586 for a shipment from Asia to the U.S. West Coast. In June 2023, the global freight rate index had dropped to almost $1,500.
Those bargains did not last. The costs to ship goods from Asia to the U.S. have since turned upward—the average spot rate to ship a 40-foot container from China to the West Coast rose 61% during the six weeks through Aug. 15 to $2,075, according to transportation data and procurement firm Xeneta.
Prices down, prices up, prices … (?)
The increase came as big shipping lines raised their listed prices after rates on the sector’s spot market plunged from nearly $10,000 a box in February 2022 to below $1,300 in late June, as overstocked retailers pulled back orders and weakening demand cut into earnings at big shipping lines.
As North America heads into the holiday season, both demand and volume are likely to increase—which could see costs rise due to the volatile price of fuel. There are also other factors, including drought that is slowing the ship traffic that carries goods in and out of the United States through the Panama Canal. Ships have had to watch their weight this year, which means reducing cargo volumes.
Rising prices continue to be difficult to tame, thanks to high energy prices and hotter-than-expected economic growth. Inflation accelerated just 3.7% year-per-year, according to the September CPI report.
Uneasy consumers look toward 2024
But prices are likely hovering around the 5% range when considering those factors. This may keep interest rates higher longer. As a result, U.S. consumer confidence fell by the most in two years as souring views—related to higher borrowing costs and lingering inflation—curbed optimism.
Overall, inflation added around 20% to the cost of goods since the start of the pandemic, and the impact of that jump is uneven across industries and will take a while to work through within the economy. In short, going forward, very few things will cost the same as they did in 2019.
Click here to read our full Q4 Market Update at ammex.com