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| 2 minutes read

Will your relocation budgets be impacted by record-high freight prices?

Here's what is going on:

In considering international assignments and relocations, this New York Times article (‘I’ve Never Seen Anything Like This’: Chaos Strikes Global Shipping) reports there are floating traffic jams where ships are stuck outside ports around the world for days and even sometimes weeks. Not only does this mean your favorite coffee is waiting in port, but the ships, trucks, warehouses and all the links in the supply chain are getting stretched.

For the mobility industry, one of the biggest issues will be right-sized, available containers for international sea shipments. Container shortages are expected to cause price increases and longer transit times in certain areas of the world. Our Plus Relocation global supply chain team shares that:

  • The shortage of containers for export in APAC, UK, Italy and Los Angeles may cause a three- to four-week delay due to steamship lines operating at maximum capacity. The delay may expand to other countries. This shortage will increase transportation costs as the demand for equipment rises.
  • Extreme congestion in the port of Los Angeles/Long Beach is causing import delays for customs clearance and shipment availability. More than 50 ships are sitting at the entrance of the ports waiting for a slot to begin the unload process, adding an additional two to three weeks in transit time.
  • Effective retroactively to Feb. 1, Argentine Customs is imposing new duties and taxes on exported household goods and articles of personal effects. The applicable tax is equal to 12% on appraised value by customs.

According to this Bloomberg article, "A.P. Moller-Maersk A/S, the world’s largest container carrier, is working at full capacity and can’t yet see a peak in freight rates that have already been propelled to record highs by pandemic consumer spending."

Because of this, there is a very real potential that the cost per relocation will go up and delivery windows may be delayed, at least in the near term, and it may be a very challenging endeavor to estimate the exact amount of increase not only on a specific authorization but for your entire program. There will likely be situations where an employee may be authorized for a 20-foot container but the only equipment available is a 40-foot container, and the company would be invoiced on the additional costs. The delays may also add cost due to the need for extra time in furnished temporary accommodations. 

A little update to this post (March 17): We are seeing a shortage of containers for export in APAC, UK, Italy and Los Angeles which can cause a 3 to 4 week delay due to steamship lines operating at maximum capacity and may expand to other countries.   This shortage will increase transportation costs as the demand for equipment rises. 

If you have not already, now is a good time to review moves on hold from the pandemic and those forecasted to come in the next year. Understand where you may need to adjust budgets or offer alternative solutions for your business and relocating employees. Hiring managers and financial stakeholders do not like surprises, so consider preparing those in your business by sharing the situation and creating the awareness there may be a budget impact along with an impact to the employee experience.

Off the coast of Los Angeles, more than two dozen container ships filled with exercise bikes, electronics and other highly sought imports have been idling for as long as two weeks. In Kansas City, farmers are struggling to ship soybeans to buyers in Asia. In China, furniture destined for North America piles up on factory floors. Around the planet, the pandemic has disrupted trade to an extraordinary degree, driving up the cost of shipping goods and adding a fresh challenge to the global economic recovery. The virus has thrown off the choreography of moving cargo from one continent to another.


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