What You Need to Know About the Supply Chain Crisis

A wall of freight during the supply chain crisis

As the world continues to struggle with the COVID-19 crisis, another crisis is disrupting the state of the world’s economy. Supply chain hubs around the world are experiencing a record number of shortages that are affecting a wide number of industries, like those in retail, technology, automotive, and medical. With the pressure of the crisis looming over everyone’s heads, what does this mean for your business?

Pioneer Packaging has been an industry leader in packaging solutions for over 35 years. But, we are more than just packaging designers and consultants; we are your partner that drives your increase in ROI. Whatever packaging issues you may be experiencing, we are here for you. Read our blog post below to learn more about this supply chain crisis. 

The Supply Chain Crisis Has Increased Shipping Rates Tenfold

Before the COVID-19 crisis, a shipment from China to Los Angeles cost on average $1,900. Today, the same shipment would cost anywhere from $16,000 to $20,000. A shipment from China to New York on average costs nearly $3,100 pre-pandemic, now it may cost you $20,000 to $24,000. 

The shipping crisis has gotten so bad, FedEx will institute a $1.50 surcharge on packages shipped through its Ground Economy deliveries during the peak holiday season. The charge will increase to $3 per package from November 28th to December 12th before going back to $1.50 for the remainder of the month.

Labor Shortages are Another Catalyst of The Supply Chain Crisis

The shipping industry is also facing a lack of workers. According to the Department of Labor, a record number of Americans quit their jobs in August alone. Additionally, there has been a record number of 490,000 job openings since July from companies like Walmart, Target, and Amazon.

This shortage is primarily due to the fact that workers are feeling underappreciated for their work. Citing things like low minimum wage, poor health incentives, and a lack of other benefits as their reasoning. 

The Cost of Raw Materials has Skyrocketed

Another problem businesses are facing due to the supply chain crisis is an increase in the cost of raw materials. People still need goods and services, so demand remains high while ordering materials to create these goods remains difficult and expensive. 

One of the biggest hit markets in raw materials is cotton. The cost of cotton has increased by 50% from early September 2020 to Early September 2021. Additionally, items such as component parts and finished goods have heavily impacted industries such as those in automotive, technology, and many more. 

The Trucking Industry is Experiencing Increased Demand

All this has accumulated to a significant increase in road transport. However, these industries still face challenges of their own. The American Trucking Association estimated that it would be short 60,000 drivers due to retirements. Not to mention new drivers would need to be trained accordingly due to COVID-19 closures. As a result, businesses are seeing a 43% increase in cost to ship products by road and rail in North America.

Pioneer Packaging Helps Strengthen Your Supply Chain

For over 35 years, Pioneer Packaging has been the go-to source for quality supply chain solutions. Our team are not only experts in developing excellent packaging solutions, but we also offer comprehensive services like fulfillment warehousing, vendor-managed inventory, our PackFlow Analysis, and continuous improvement program. 

We work closely with you to ensure every point in your supply chain runs as smoothly and cost-effectively as possible. Contact Pioneer Packaging today and learn why we are a leader in packaging innovation.

Scroll to Top