Companies are preparing for historic supply-chain snags to continue into 2022.
Scott Price, the president of UPS, said on Sunday that low global vaccination rates, especially in developing countries, were likely to contribute to increased shortages in the coming year.
"The logistics industry does not see 2022 as having any less disruption in supply chains than in 2021," Price told AFP, an international news agency located in Paris.
Since the onset of the pandemic, a boom in demand has overwhelmed the supply chain. Transportation has struggled to keep up as rising demand met COVID-19 shutdowns, labor shortages, and historic weather occurrences, causing a lack of shipping containers and supplies, alongside major price hikes.
Price's comment came as overseas shipping rates between Asia and the US hit an all-time high. Judah Levine, the head of research at Freightos, told Insider that shipping prices between the two regions have jumped 500% from this time last year.
While the UPS executive said he expects transportation costs to stabilize in the coming year, several companies have already boosted consumer prices because of elevated shipping costs.
Kroger, the nation's largest supermarket chain, indicated on Friday that it plans to hike prices because of inflation.
Kroger is "passing along higher costs to the customer where it makes sense to do so," CFO Gary Millerchip said at the company's earnings call on Friday.
Food prices in the US have been on the rise for six straight months. In June, US consumer prices hit their largest annual increase since 2008, with oil and food prices leading the categories with the largest price hikes.
On Friday, Toyota said it plans to further slash its output over the next two months by 400,000 units because of the computer-chip shortage. Similarly, the major paint company Sherwin-Williams has been plagued by shortages since the Texas freeze, and more recently because of the effect of Hurricane Ida on petrochemical production.
The athletic-apparel company Lululemon said last week that the company was struggling with shortages and higher transportation costs because much of its supplies — like many US companies' — were made in countries such as Vietnam that have suffered from COVID-19 shutdowns in recent months. The company has been one of the retailers to see a surge in sales during the pandemic, as working from home pushed a boom in athleisure wear.
In 2021, UPS hiked its prices by 4% to 5.5%, but Price said he expected prices to increase by a much slimmer average of 2.8% in 2022.
"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.
