Global Freight Costs Settle as Lumber Prices Rise: Kiplinger Economic Forecasts
Lumber prices will jump thanks to Canadian wildfires and a boom in new home builds.
To help you understand what's going on with the global supply chain and what we expect to happen in the future, our highly-experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest...
The near-term outlook for freight shipping costs: mixed. For trucking, expect a 5%-10% increase in medium-distance rates, due to the bankruptcy of venerable Yellow Trucking, the fifth-largest firm in the less-than-truckload sector. The loss of that capacity figures to halt and even reverse the recent slide in rates. Dry-van rates are off 22% vs a year ago. Flatbed rates: down 8% in the past two months.
Air cargo costs should come down soon, due to declining cargo volumes, now that ocean shipping bottlenecks have mostly eased. The cost of shipping by air from Europe to the U.S. is already back to pre-pandemic levels. China-to-U.S. rates are still a third above the pre-pandemic level, due to some expensive contracts that were signed during the peak of the air shipping boom. Those will expire shortly.
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Watch out for a jump in lumber prices. The bad wildfire season in Canada, which supplies 80% of U.S. lumber imports, has burned 9.2 million hectares of forest, with another couple of months to go before cooler and wetter weather ends the danger.
Lumber prices are down recently due to softer home-building activity in early summer. But with inventories of existing homes for sale so thin, construction should pick up. The combination of rising demand and reduced supply could up lumber prices by 20%.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
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