UPS exec sees supply chain disarray extending into 2022

UPS international president Scott Price expressed confidence that transport costs could be contained in 2022 after the company enacted a series of surcharges earlier in the pandemic amid skyrocketing demand and higher operating expenses

UPS is girding for more supply chain problems in 2022 after this year’s upheaval, but does not expect the disruption to cause huge spikes in transport costs, the shipping giant’s international president Scott Price told AFP. 

Price said low vaccination rates in key developing countries will likely lead to additional shortages of raw materials and components similar to those that have plagued industries from automakers to apparel to homebuilders.

“I half-jokingly tell people ‘Order your Christmas presents now because otherwise on Christmas day, there may just be a picture of something that’s not coming until February or March,'” Price said.

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UPS spent more paying for disinfectant, installing plastic dividers in work sites and covering hotel costs for employees in markets where workers were unable to commute to their homes due to strict government mandates.

In 2021, UPS raised prices between 4.0 and 5.5 percent, depending on the market.

UPS’s outlook for more supply chain disarray follows announcements from several other companies over the last week, including Toyota, which said Friday it will cut car output by 70,000 units in September and 330,000 in October because of ongoing virus disruptions and a chronic global semiconductor chip shortage.

Paint company Sherwin-Williams announced surcharges due to raw material shortages worsened by Hurricane Ida, which took key US petrochemical production off line.

Price said one of the big dislocations during the pandemic has been the loss of shipping capacity on commercial jets, which typically deliver some cargo on international flights.

A key question will be the economic fallout from the “inequity in Covid vaccine access” between the developed and developing world, Price said.

UPS normally announces its annual rate increase in November, but wanted to go early this year to allow clients increasingly worried about inflation to plan more effectively.

“God forbid something worse than the Delta variant comes out,” he said. “Then all bets are off for everybody.”

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