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Why a shipping crisis could end up costing you more in the long run

Products are either overseas, at sea, or in U.S. ports. And yes, experts say you can blame COVID-19 for part of the problem.

MEMPHIS, Tenn. — Get ready. You could be paying more for items, or they may not even be available. That's because experts in the global supply chain say there is a shipping crisis. 

Products are either overseas, at sea, or in U.S. ports. And yes, they say you can blame COVID-19 for part of the problem.

Supply chain experts say vaccine distribution is a factor, but vaccines are usually shipped by air. However, because right now the cost of air freight has skyrocketed, more items are being shipped by boat, and experts believe that's part of the problem.

Hewlett and Dunn Boot and Jean company is located on the Collierville Town square. It's owner Charles Hall is all too familiar with the shipping problems happening globally and in the United States.

"Most of the companies, it's been very difficult to get stuff from," said Hall.

Hall said some products he gets from China haven't arrived and other supplies sat at the dock for weeks.

He said even boots orders made in the USA are affected. 

"I placed a few fall orders at the end of July and out of 80 pairs, I've only received 6 or 7 of them and those are made in USA," said Hall.

"What we are really dealing with is a freight tsunami that has essentially overwhelmed the system," said Daniel Booth.

Booth is President of the Memphis World Trade Club, a professional organization for people who work in the global supply chain and logistics industry. Booth said ocean freight is major problem right now.

"It's very difficult for shippers to get space on vessels, and then once those vessels get to port here in the U.S., they run into backlogs and congestion," said Booth.

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Booth said in early 2019, shipping a 40-foot shipping container from Shanghai to Los Angeles cost around $1,200. Now it's $4,800 - a 300% price hike.

Because of the backlog, once here, product can sit in storage for months waiting to be moved. The longer it sits, the higher the storage cost for importers.

"Often times, there is not enough equipment or chassis for importers to get their containers pulled out from the port - and that is one big problem," said Booth. 

Every day there are dozens of ocean vessels sitting off U.S. shores just waiting to unload. 

"These problems have always existed, but COVID-19 and the massive surge in imports and volumes are really exacerbating those problems."

Many supply chain experts believe in the future, the increased shipping and storage costs could end up affecting your bottom line.

"There may be some occasions where companies elect to eat some amount of the extra costs temporarily, but ultimately it's going to lead to price increases," said Booth.

"I've already gotten word it is going to be increasing," said Hall.

Hall said he's expecting a price hike from some of his suppliers.

Supply chain exports said because of COVID-19, more people are spending less money on services and spending more money of stuff, which is only adding to the problem.

"When you couple the massive demand in imports and e-commerce and PPE, and now the vaccine distribution, it's really created the perfect storm," said Booth.

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