Over these last few months, we have been experiencing supply issues in several of our product markets, including vitamins and amino acids, steel equipment, urea, and poly resin. As a result, we’ve seen price increases and extended lead times; you may be wondering what factors are causing these market disruptions.
Today’s supply issues are primarily due to the limited container space on ships coming from overseas, along with the rising truck driver shortage in the U.S. Fewer container vessels are coming to the U.S., which drives up the cost of container space and ocean freight. Less product in our supply also contributes to the higher prices we’re seeing. To add to the supply and lead time issues, FreightWaves, Inc shared that container ships have faced extreme congestion at the west coast ports of Los Angeles and Long Beach. As of mid-February, ships were anchored at port for an average of seven days before being unloaded (Miller).
Once the product is unloaded and ready for ground transport, the driver shortage in the U.S. transportation industry is exacerbating the delay problem. In 2020, the U.S. saw 200,000 less truck drivers enter the workforce (Keppler). Meanwhile, the demand for drivers continues to surge as consumer spending increases, especially through online shopping. This too results in higher freight costs and extended lead times. We, along with the rest of the country, are certainly feeling the pain of these logistics issues.
Steel market prices have been increasing since late fall of 2020. Roger Slaughter, special project lead, oversees our livestock equipment and grain handling division purchases. He hypothesizes that consumer demand is greater than the manufacturers’ abilities to produce. Freight Waves also shared that some of those delayed ship containers are holding parts for manufacturing sites, which could also be contributing to supply issues.
In addition to the freight challenges explained earlier, here are some other challenges affecting these specific product markets:
- The U.S. urea supply has also been affected by tariffs. We expect the urea supply issues to remain through this planting season, as urea fertilizer is also in high demand for agronomic use.
- Poly resin is a petroleum-based product, so the increase in crude oil prices combined with the higher freight costs are the source of the price hike.
- Vitamins and amino acids imports are also facing complications due to anti-dumping duties.
In these challenging times, we want to extend our gratitude for your continued business. We understand that your livelihood relies on having these products readily available, and we are doing our absolute best to serve you. Some action steps we’ve taken to help mitigate these delays include bringing on owner-operators and using LTL carriers to help fill gaps, as well as actively recruiting more drivers. As we move forward in the months to come, we greatly appreciate your patience and understanding as we work through these tough supply chain challenges.
“New Video Shows Massive Scope of California Box-Ship Traffic Jam.” Edited by Greg Miller, FreightWaves, FreightWaves, Inc, 11 Mar. 2021, www.freightwaves.com/news/new-video-shows-massive-scope-of-california-box-ship-traffic-jam.
Keppler, Marty. “Stutsman Logistics Presentation.” Cedar Rapids, Cedar Rapids, 10 Mar. 2021.