As skyrocketing shipping costs and weekslong delays continue to plague American companies and consumers, the Footwear Distributors and Retailers of America has sent a letter to President Joe Biden asking for help addressing the industry’s challenges.
“Our industry depends on an efficient and reliable transportation system to provide more than 2.4 billion pairs of shoes to U.S. consumers every year — or 7.4 pairs for every man, woman and child in America,” wrote FDRA President and CEO Matt Priest. “However, the current shipping environment places a significant burden on footwear companies delivering footwear to the U.S. market. Many footwear businesses struggled throughout the COVID-19 pandemic, and the retail sector was hit particularly hard. Now as we slowly emerge from the pandemic, footwear companies face substantial shipping costs, container shortages and transit delays.”
The price of shipping a container from Asia to America’s West Coast ports is now $6,288, up from $2,811 this time last year, according to the Freightos Baltic Index, an international freight rate index. About 99% of all footwear sold in the U.S. is imported, with the vast majority coming from Asia, where recent port delays in China have added to supply chain pressures. Now, American companies are struggling to get new product onto shelves just as the economy is reopening and consumers are increasingly finding reasons to shop for shoes.
Biden’s White House has begun to heed to calls for help, with press secretary Jen Psaki announcing an executive order Wednesday to address “unjust and unreasonable fees” in the shipping industry. The order also asks the Federal Maritime Commission to work with the Justice Department to ensure companies aren’t artificially inflating shipping rates due to lack of competition. With high inflation already hitting consumers’ wallets and companies increasingly passing on costs, the order is ultimately aimed at lowering prices for American shoppers.
“The negative impact can be felt across the country. With an artificially constricted supply of vessel capacity controlled by a small number of ocean carriers, it has become increasingly difficult for companies to secure vessel space,” Priest continued in the letter. “Many companies are forced to pay space guarantee surcharges that continue to escalate, with some seeing fourfold increases in shipping fees. Others have reported that carriers refuse to honor existing contracts. Often, the best-case scenario is agreeing to pay exorbitant rates to book space on a vessel with a sailing date that is delayed, sometimes for weeks. This practice destroys speed to market efforts, results in lost sales, and vastly multiplies costs for U.S. businesses during an already difficult time.”
The FDRA’s pleas come on the heels of similar calls for action from the National Retail Federation and numerous other industry groups.