Container Costs Up by 'Staggering Numbers': Solomon Retail Expert

Many of Solomon Partners’ retail clients are forecasting that congestion at the ports of Los Angeles and Long Beach, California, will persist at least through the fall of 2022, said Managing Director Cathy Leonhardt, co-head of its Global Consumer Retail Group, on a Conference Board podcast Friday. Roughly 100 vessels were waiting to dock at the two ports through the close of business Thursday, she said. "All of this is creating massive delays in the system," she said. "What we are seeing is certainly unprecedented." The solutions to the crisis are "challenging, given the concentration of the ocean carrier alliances” that control 80%-90% of the transoceanic volume, she said. Container cost increases are "extraordinary," said Leonhardt. Costs are "multiples of what they used to be," and one Solomon retail client "said it used to be $5,000 a container, now it's $20,000," she said: "Staggering numbers." Air freight as an alternative “only goes so far,” and air freight costs are averaging 125% higher than a year ago, she said. Supply chain costs “will continue to rise,” and inevitably will be passed on to consumers, said Leonhardt. “At some point, when you begin to see this price inelasticity, I do think you’ll start to see shifting spending patterns,” she said. “It means that consumers are going focus their spending more on necessary goods. We see that when the costs rise.”