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Shipping Prices reach Record High

As the global pandemic winds down and things start to open back up, people are sick of being stuck in their house and now more than ever people are wanting to go out. With restaurants opening back up and getting back to full capacity, the increased demand for fresh seafood is higher than ever, and the prices reflect it! This is not just a result of increased demand however, it is a result of port backups, freight delays, and increasing gas prices.

Ports around the world are experiencing significant delays in loading, unloading, and overall processing times, causing shipping prices to skyrocket. Shipping costs are up almost 4 times what they were last year, and as of October 12th some of the largest ports in the United States such as LA and Long beach are seeing vessel backups of over 80 ships. The cause of these backups is not necessarily ship availability, but a combination of poor processing ability within the ports due to the lack of workforce, tighter Covid testing of packaging for internationally shipped goods and increased consumer purchasing during the pandemic. Workers are not able to move containers out of the port quick enough because there are not enough workers or trucks.

On average, these ports can hold as many as 30 vessels at once and those that cannot fit form a cue off the coast and wait their turn to dock and unload. Ships are being forced to wait over 2 weeks off the coast before they are being received and processed through the ports, and that is both domestically and internationally. Ships can carry up to 12,000 containers and each container can cost upwards of $20,000, so it is costing some ships over $600,000 per day they wait off the coast. Between 2-week travel times, and 2-week backups once you get to the port, the number of total trips these ships can make has been almost cut in half. These delays and inability to guarantee products on time is pushing more and more shippers to use air cargo. However, this is now affecting the prices of landed goods, causing them to go up. The uncertainty that quarantines have put on air travel have seen hundreds of flights canceled or forced to leave only half loaded.

As a result of these delays and hindrances in processing ability, trucking costs have gone up because the demand to get products out of the ports and to the buyers has significantly increased. Not only that, but this time last year crude oil was going for $37.69 per barrel, which is almost half of the current price of $82.14 per barrel, making fuel surcharges increase already skyrocketing shipping rates. In addition, the demand for workers has caused labor costs to go up over the last year seeing a minimum wage increase of over 6% in states like Massachusetts. Shippers in China are limited to just 2 containers a month due to a lack of container availability, which drives up the cost of the containers. These transportation issues are affecting all sorts of industries, not just the seafood industry, leading to inflation across the board. Since this is affecting all industries, it comes full circle and now in addition to the increased freight and shipping rates, the cost of all raw materials like boxes and ice packs used to ship our products has increased 30-50% for these same reasons.

President Biden met on October 13 with both private and public industry leaders with the goal of using federal action to reduce shipping delays heading into the holiday season. Part of the goal is to move Long Beach and LA ports to 24/7 operations as these 2 ports alone are responsible for 40% of all shipping volume that enters the Unites States. Many large retailers have committed to expanding their hours of operation and some (such as Walmart) have even chartered their own vessels in an effort to meet demands, even though it is costing them far more money to do so. Until the ports are cleared up and the cues of ships waiting off the coast have been processed, the inflation we are experiencing will only continue to grow and impact our day-to-day price and availability of goods. However, we hope this does not last too long!

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