As the supply chain crisis in the United States spreads into the new year, the surge in the price of raw materials for refrigerators, cars, window frames and plumbing shows no sign of abating.
John Gillespie (John Gillespie) sees these problems continue to grow across the country. The merchandise manager at Superior Essex helps supply the metal cabling that supplies most of the power to US homes and Electroweb and says transportation and logistics costs for copper and aluminum are the most significant increases in total costs.
Persistent congestion caused by the pandemic is increasing the transport costs of trucks and rail vehicles, causing delays in the delivery of materials to consumers. Product makers are paying record prices for copper and aluminum, key metals used in everything from wires to electronics to cars. In the US, the benchmark price for transporting copper is the highest since 2003, while the cost of transporting aluminium now accounts for 20 per cent of the total metal price.
Gillespie, who works for one of the largest wire suppliers in the United States, said: "the ship is trapped at sea and the railway does not have enough workers, so the railway freight yard is very crowded and my material is stuck in the back of 1500 cars, so they have to dig it up, which will take several days." This perfect storm is having a knock-on effect. People are asking for metal, but the material just doesn't exist. "
Supply chain problems made headlines for much of 2021, with commodity prices rising to their highest level in more than a decade as demand rebounded after the pandemic blockade met with supply constraints. This has fuelled inflation around the world and forced governments to take action, and many hope that trying to ease outstanding problems will stabilize the market this year.
Buyers usually have to pay a higher price than the Comex exchange to ship copper to the Midwest.
The situation is even worse for aluminium, which has surged more than 40 per cent over the Midwest delivery price on the London metal exchange in the past two months. For buyers, that means an extra $768 a tonne on top of the original metal price of about $3100 a tonne.
Industrial metals prices cooled somewhat at the end of the year, but have rebounded again since late December as energy prices, geopolitical concerns and Omicron variants put more pressure on the broken supply chain. An indicator of industrial metals hit an all-time high in late January.
Traders say you can use copper and aluminium if you need them, but they are not in the right position to take advantage of the limited supply of trucks and railcars. Efforts to encourage truck drivers in Canada and the United States to be vaccinated have made things more difficult, with reports of hanging up at key crossing points for aluminum. Canada is the largest supplier of aluminium to the US, accounting for about 50 per cent of total US consumption.
To be sure, not everyone thinks that high freight rates will last longer. In fact, according to researcher Harbour Intelligence, they could start cooling as early as the second quarter of this year.
"We think we will see a sharp decline from the second quarter as we see the logistics stalemate dissipating," said Jorge Vazquez, Harbor's managing director for aluminum market research.
Demand will also fall as the Fed begins to tighten monetary policy and raise interest rates, Harbour said.
For owners headquartered in EW Berger & Bros., New Jersey For Jay Richman, EW Berger & Bros. Is a family-run product wholesaler, from copper pipes and fittings to water heaters and faucets, the end of logistics problems is not fast enough. Richman said he had to wait three months to deliver the order. A year ago, the waiting time was about six weeks. Before the pandemic, it was about two to three weeks.
"they gave me a quota-if I wanted to buy 500 pieces of copper, they would tell me they would give me 50 yuan. When I receive the goods, it may be 10 yuan. I don't see any improvement. Richman says he buys products from domestic manufacturers and sells them to companies like Amtrak. "now everyone wants to get back to normal and everyone is ready. I have a lot of business, but I don't have any materials. If I had these materials, this might be my best years, but I didn't. "
