Snowstorms and frigid temperatures across much of the USA the past six weeks have stalled shipments, forcing some manufacturers to shut down for days and delaying deliveries to some retailers.
The snarls have compounded the effects of weather on the economy. Last week, the government reported that factory production fell sharply in January. Some workers have seen reduced hours and pay.
The disruptions are also helping drive up some trucking rates — costs that could get passed through to consumers.
“It has a massive ripple effect through the supply chain and the economy,” says Bob Costello, chief economist of the American Trucking Association.
Ports in New York and New Jersey have been especially hard hit. Not only did New Jersey ports close during each big storm but operations were slowed afterward as workers moved snow to make room for shipping containers, says Evans Papantourous, owner of EP Transportation and Logistics. The firm hires trucking companies for shippers.
Most days, the snags have spawned mile-long back-ups of trucks leading to ports in Newark and Elizabeth, he says. Many deliveries to stores and factories have been a week to 10 days late as workers tried to clear a mushrooming stockpile of goods on the docks, Papantourous says.
“I haven’t seen it this bad in 30 years in the business,” he says. “This is killing us.”.
Many truck shipments leaving cities such as Atlanta, Chicago and Dallas have been delayed two to three days after each storm, says Ben Cubitt, senior vice president of logistics company Transplace. Sub-zero temperatures also have caused truck engines to fail.
The delays have a domino effect because trucks are also late making pickups in their destination cities, he says. In the past, truckers could clear the backlog after each storm. But this year, one winter blast has followed another, delaying deliveries of everything from apparel to electronics.
“You can’t catch up,” Costello says.
Many manufacturers in the Midwest, Southeast and Northeast have shuttered plants for as long as a week because they did not receive raw materials on time, says Chad Moutray, chief economist of the National Association of Manufacturers. Late deliveries are a problem because producers maintain lean inventories to cut costs, Moutray says.
Some retailers have experienced spot merchandise shortages. Gary Weiner, CEO of Saxon Shoes, which owns Virginia stores in Richmond and Fredericksburg, says 15% to 20% of deliveries arrived two to three weeks late from the Midwest last month. “Maybe we lost 10 days of selling time” for those items, he says.
Cubitt says some shippers are scrambling to hire alternative trucks to meet deadlines but that’s driving up certain trucking rates by 15% to 20% — costs that eventually could be passed to consumers.