Why is moo-ving costing more and what's behind "relo-flation?"

Throughout 2021, we have progressively been seeing relocation costs increasing (let's call that "relo-flation"). Some of the posts from earlier in the year pointed to the variety of impactors that were having an escalatory effect on relocation budgets:

• Will your relocation budgets be impacted by record-high freight prices? 
• Is a sizzling real estate market good for relocating employees? A look at home sale conditions.
• Is a sizzling real estate market good for relocating employees? A look at home purchasing conditions.
• How will "fernweh" impact your global mobility program post-pandemic?

Looking back to last spring, the pandemic created a big group of folks who put their moves "on hold." As the typical peak season approached, we warned that surging demand could create challenges for employees and programs for many months ahead and advised relocating employees to set dates ASAP. One post connected what was being seen in the wedding industry to what was expected in the relocation industry. The high level of demand and a lack of available resources impacted many programs to the point where a few months ago, we honed in on how the pandemic has impacted global mobility budgets and what you should do.

In the post, we looked at numerous relocation benefits and described what was going on and explained why costs were escalating. We looked at real estate, household goods shipments, rental costs and temporary accommodations, as well as car rentals and transportation challenges. We shared five realities that mobility programs should consider as it related to the numerous increasing costs of relocation benefits. 

Many of the service hiccups and cost increases tie back to the challenges in the global supply chain, even when those moves are domestic. This article in The Hustle helps prove just how complex the situation is, and how numerous things that we might not ever know to consider are having an impact. For instance, the fact that challenges in the lumber market created a shortage of saw dust, which impacted milk production and raised costs, is not something I would have put together when buying milk at the grocery. (Maybe it's good I drink alternative milks?) Other examples relate to manufacturing shutdowns in Asian countries, which impact the supply of raw materials and finished products, creating shortages for high-demand products...think microchips and cars. Then there is the labor shortage, where a lack of workers and drivers is slowing down the system.

So where are we at now and what should we expect as it relates to global supply chain challenges and the impact to costs? 

We have all seen the articles and news stories about the ports being backed up with record numbers of ships and their cargo. With the holiday shipping season having started, it does not look to get any better, and most are predicting that supply chain issues will continue well into 2022 and beyond. Ongoing supply constraints, rising inflation and the lingering labor shortage (not to mention the ongoing pandemic) keep the outlook very uncertain. Per Fortune, 73% of CEOs say that labor shortages will be the biggest disruptor over the next 12 months. On top of that, logistics insiders (per this Inc. article) say that supply chain challenges won't be resolved until at least 2023.

Tracey Gatlin, senior vice president of global services and supply chain at Plus, shared her insights:

"There is a lot of focus on the international shipping issues today. It may be assumed that this has no affect on the U.S. domestic shipping business, but it does in a few ways. There are more shipments than there are drivers in the U.S., so driver shortages affect all industries, including ours. Some of the large retail organizations in the U.S. also pay a premium for drivers to move their goods, while there is generally lower pay on moving personal items and a great deal more work to do so. In temporary housing, labor shortages have caused cleaning frequency to be reduced or minimized. Front desks may not be fully staffed as they once were and supplies once readily available upon move-in, such as multiple rolls of toilet paper or milk in the fridge, may not be available right now.”

Without a doubt, all types of service providers are currently worried and expecting to continue to deal with labor challenges. We expect ongoing issues within all industry-related service providers, especially within the household goods industry, travel providers, rental car industry and temporary accommodations industry. Given that all of the systems that surround our industry are under stress, we should expect ongoing escalations and increased costs. Obviously this is something that every RMC and supply chain partner will be working diligently on solving in their 2022 business plans!