Rising Shipping Costs

Rising Shipping Costs

June 1, 2015

The Barrett Family of the Weekly Hardwood Review recently wrote about the rising costs of shipping lumber and wood products.  This affects those in the wood and lumber business in different ways, but we need to prepare now to keep up with the rising cost of shipping.

Why is the cost of shipping lumber and wood rising?

Costs are rising due to a few factors. The Gross Domestic Product is forecast to increase approximately 3% this year. With this increase comes an increase in the amount of product shipped by truck or railways.

Since the amount of wood and lumber being shipped is increasing, the truck freight rates are expected to increase by at least 5 % to 7% this year.

What does this mean to a customer?

The increase in freight rates means an increase in shipping prices for the customer. Another issue for the customer is product delivery. Businesses are thinned out when it comes to staffing and many companies operate on the “just in time” model, so an increase in shipping means delayed deliveries.

What does this mean to a business?

Businesses need to plan their pricing structures accordingly to accommodate the increase in shipping pricing. Some freight companies may have to buy new trucks in order to comply with new environmental regulations. This new truck might cost the company $140,000 to $175,000.  Customers ultimately pay for these new vehicles in the form of higher freight rates.

If your company has enough trucks, you still might be short on truck drivers. The American Trucking Association claims that the driver shortage is now at 30,000 and could increase to needing 100,000 additional drivers per year over the next decade.

Take the time to research your freight options as soon as possible so you don’t get stuck short-handed. This is an issue that is expected to get worse over time, so you want to be ahead of the curve when it comes to staffing, shipping, and maintaining enough trucks.

Please contact WPMA’s Philip Bibeau at 978-874-5445 for more information.