The Ongoing Addition To Rising Consumer Prices From Shipping Costs

Although in April 14's "Bridgewater Escapee Matthew Klein On CPI Inflation" we outro'd with:

....He goes on to make a couple important points, one being the differences between CPI and Personal Consumption Expenditures and the second being the change from disinflationary to inflationary impact of of rents and owner equivalent rents, and it is in this area that I think the next round of 'flation that bites and holds on will be seen....

mainly because OER and rent is such a  large and sticky component of the U.S. CPI basket (more on that next week). 

There are other places where large price increases are being seen.

 

From Wolf Street, July 14:

 

And Now the WTF Spike in Transportation Costs

They’re getting passed on and feed into the inflation scenario.

Before we get to the spiking prices and expenditures that shippers such as industrial companies or retailers now have to pay to ship their goods across the US, I want to point at the volume of shipments.

Shipment volume in June was strong but down from peak year 2018, and has been lower than the peak year 2018 every month this year, according to the Cass Freight Index, which covers all modes of transportation, but is centered on trucking, with truckload (TL) shipments representing over half of the dollar amounts, rail in second place, and less-than-truckload (LTL) shipments in third place, followed by parcel services and others. But it does not include bulk commodities.

The Cass Freight Index for shipments in June (red line) was up 4.2% from June 2019 (gray line), but was down 1.3% from June 2018 (black line). Some demand may be backing off as the impact of stimulus spending is fading, after the historic spike of retail sales earlier this year. But there are also numerous signs that the transportation industry is straining to meet demand from shippers, amid widespread complaints about longer delivery times, and about equipment and driver shortages.

There has been enormous need for transportation, driven by the stimulus-fed spike in consumer spending on goods, and it is strained transportation capacity. And freight rates have shot higher, particularly in trucking.

According to the Cass Freight Index for Expenditures, the total amount these shippers spent in June on shipping goods to their customers in the US – despite the less than record volume – spiked by 11% from May, by 56% from June 2020, and by 28% from June 2019....

 ....MUCH MORE

And then there's ocean freight....

This is a factor that won't reverse until consumers stop spending and/or ships on order and planned are delivered and enter service.