Prices will remain high, California warehouse owner predicts
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David Erlanger’s warehouse and distribution business in Riverside, California, is full to the brim with boxes of wineglasses, luggage, bedsheets and more.
After container ships are unloaded at the ports of Los Angeles and Long Beach, drayage companies truck individual shipping containers to warehouses like Erlanger’s, many of which are an hour inland in Riverside. Between shipping delays and consumers spending more on goods than prior to the pandemic, Erlanger has never seen anything like this in his nearly 40 years in the business.
The president and CEO of Erlanger Distribution Center gave “Marketplace” host Kai Ryssdal a tour of one of his two warehouses, which occupy around 200,000 square feet.
Erlanger started working at the family business in 1984 and bought the company — where his own son now works — from his father about a decade ago. Erlanger Distribution Center employs between 40 and 60 people, with the number increasing during busy periods like the holidays. It works with importers that sell to major retailers like Walmart and Dollar General or ship directly to consumers.
“You’re looking at merchandise that’s come in. We’re palletizing and shipping it,” Erlanger said. “And a lot of it, because of the problems at the harbor, is staying.”
On Nov. 12, Erlanger received containers that carried Halloween goods for one of the importers he works with. Because of the late arrival, Erlanger will store the products for another year until his customer can sell them. In addition to the delays of products coming into the warehouse, the containers Erlanger’s team has already emptied are being picked up late to go back to the ports.
“I’ve got 14 containers between here and the other warehouse that are empty and waiting for pickup,” Erlanger said. Before the pandemic, it was normal to have only two empties sitting outside.
“We try to get it out right away,” Erlanger said. “We’ll have labels ready, truckers ready for appointments. But one, the trucker may not come to pick it up because that trucker may be late for someone else or overbooked. And then the other thing that happens is we may not get the container.”
Recently, Erlanger and his crew have been prepared to receive six to eight containers a day at the warehouse. But because of delays, only one gets delivered.
“It then means that those containers come in later, so now it’s a Saturday that we have to work,” Erlanger said. “So, it’s an overtime day. There’s some tremendous expenses if it’s not timed right.”
Despite the delays, Erlanger Distribution Center is on track for a record year. Many of the increased costs of shipping — like container rates or trucking fees — are paid by Erlanger’s customers, the importers. His warehouse is filled to the rafters with imported goods stacked up on wooden pallets, with even more products blocking some aisles.
“We tried to buy another warehouse,” Erlanger said, but they struggled to find space. “We got [a Small Business Administration] loan for around $12 million and couldn’t find anything. It’s tight, and now it’s moving out to Banning or Beaumont,” which are California cities farther away from the ports.
As a pivot point between importers and retailers, Erlanger doesn’t see our global supply chain issues coming to an end in the near future. Much of it, he thinks, will come down to time and the pandemic easing up. And he predicts prices will remain high.
Everything at Erlanger Distribution Center is stored on wooden pallets, and pallet prices have climbed from $5 pre-pandemic to $12 to $20 per unit.
“That’s a heck of an increase,” Erlanger said. “And of course, that gets passed on, so somebody is going to end up paying for it. And when things get back to normal, when do prices go down?”
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