As the markets prepare for the latest consumer price index data on Tuesday, logistics managers are warning of a persistent source of inflation in the supply chain, and saying consumers should be ready for the impact it will have on their wallets. While many sources of supply chain inflation that stoked higher goods prices have come down sharply, including ocean freight rates and transportation fuels, bloated inventories due to a lack of consumer demand are sustaining upward pressure on warehouse rates.
“In 2022, we saw rate levels for international air and ocean and domestic trucking fall back down to Earth,” said Brian Bourke, global chief commercial officer at SEKO Logistics. “But inflationary pressures remain where demand outpaces supply in 2023, including in warehousing through most of the United States, domestic parcel and labor.”
One reason for the imbalance between warehouse supply and demand is lack of new facilities coming into the market.
“National warehousing capacity remains low and will remain tight for the foreseeable future as U.S. industrial construction starts have fallen considerably year-over-year due to rising interest rates,” said Chris Huwaldt, vice president of solutions at WarehouseQuote.
Consumer prices have come down sharply as goods inflation which surged during the pandemic has cooled, leading Federal Reserve Chair Jerome Powell to express confidence after its most recent FOMC meeting that “disinflation has begun.” December’s CPI was the smallest year-over-year increase since October 2021, at 6.5% on an annual basis, down from a 9.1% peak in June 2022.
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