By: Ann Knapp | CRP, GMS, CMC

June 4, 2021

The HHG Industry & The Summer of ’21

While the summer household goods moving season is heating up, 2021 is shaping up to be a little hotter than usual. The summer of ‘21 is the perfect storm which includes a range of issues the industry has been battling for some time, such as driver and labor shortages. Today, there is a range of new challenges, compounded by the lingering events of 2020.

These factors boil down to several key areas:

  • Increased Volume
  • New Storage Challenges
  • Challenges with Materials & Supply
  • Air & Sea Freight Cost Volatility
  • International Port Delays
  • Continuing Driver & Labor Shortages

It is important to remember that many of these challenges are simply beyond the control of the relocation and HHG industries. Let’s dive into the major challenges facing the household goods transportation industry today.

Increased Household Goods Move Volume

Move volume is up across the industry, an increase over currently elevated levels that have been present for the past year. Corporate relocation volume is up over 2020 and has been approaching pre-pandemic figures from 2019. 

Additionally, U.S. military moves have been restarted which account for a large portion of typical HHG traffic. Previously, these moves were on hold throughout 2020, with few exceptions for emergency or national security moves. Military relocation volume has suddenly jumped, nearing its typical summer volume.

COD/Consumer business

Volume began to skyrocket in 2020 with consumers deciding that they want to make major life changes during the pandemic. This was accelerated by work-from-home policies, with companies allowing their workforce to live and work from anywhere with an internet connection.

Due to increased demand, COD pricing has become elevated. This increase in consumer pricing will continue to harm those relocating employees that are provided a lump sum benefit in place of a comprehensive relocation package. Their moving budget will no longer stretch as far as it may have in previous years, placing these transferees in a tight spot.

Heightened increases in consumer moves have caused a resurgence of “rogue movers,” fly-by-night moving companies who prey on individuals looking for cheaper moving options. This increases the risk that transferees who receive lump sums as their sole relocation benefit may fall victim to similar scams as they try to conserve their funds for moving.

HHG Storage Challenges

Household goods storage capacity is not something that the industry worries about very often. Few in the business today have encountered it before. Well, hello 2021, we’ve got ourselves a shortage of storage!

Storage Capacity for Personal Property

HHG shipments that required storage options have been on the decline for more than a decade. In the past, the Real Estate market was well balanced and most shipments were delivered directly to the transferees’ new homes, bypassing the need for storage entirely. 

This decline in storage needs pushed many in the industry to downsize their warehouse spaces to lower overhead costs in a shift to smaller, less costly facilities.

Today’s red hot Real Estate market has caused an increased rate of overlap for the typical transferee’s relocation timeline. Homes are selling quickly, causing employees to move out sooner than anticipated. Once at their destination, the highly competitive market is preventing employees from finding suitable housing promptly as it has become common for homes to be sold before the family can even view the property. This translates to extended stays in temporary housing for the family, while their household goods are put into storage until a home can be secured.

We’re early into the summer of 2021 and HHG storage warehouses are already full. The industry is seeking to add extra capacity through temporary warehouse locations and temporarily leased trailers to house the uptick in household goods that need to be stored. A byproduct of this, in some cases, is a change in the typical logistics for these new storage locations. 

Additionally, some shipments must be stored further away from the transferee’s ultimate destination, leading to potential costs beyond what would typically have occurred with a closer storage facility.

HHG Labor Constraints

Storage in transit deliveries for corporate relocations is typically handled by local labor that is arranged by the local destination agent. The existing labor shortage that the industry has been dealing with has been compounded by the ongoing pandemic, further restricting supply. This limited labor pool places additional restrictions on developing creative solutions for manning trucks.

Materials & Their Impact on Household Goods

As many have seen in the news, the cost of simple building materials at your local hardware store has almost quadrupled over the last year. This is another excellent example of supply and demand playing out in real-time.

Lumber

The cost of lumber is up, spiking as high as 347%! Primarily this has impacted the housing sector with builders and consumers taking a hit on the cost of new builds. For the household goods and storage industry, this has dramatically increased the cost of 3rd party crating.

Additionally, as new storage vaults and warehouses are being built/bought to meet demand, higher costs, limited availability of materials, and a slower building pace are the result.

Corrugated Cardboard

The quintessential packing material for the majority of household goods moves, the cardboard box has been steadily increasing in price for a decade now thanks to the rise of the eCommerce and flat-pack furniture giants.

Costs have continued to go up in concert with the rise in demand for household goods moves. However, there is good news – While the price is going up, supply currently appears to be meeting the demand for packing materials.

Fuel Costs

Another newsworthy item, gasoline costs have risen in recent months, exemplified by the interruption of supply pipelines on the East Coast. Some concerns have been raised by clients regarding gasoline prices and how this would translate to HHG move costs. However, the rise in gasoline costs does not have a direct correlation to the price of diesel, which the household goods industry runs on.

  • Most household goods transportation equipment runs on diesel and not gasoline
  • Diesel pricing was on the rise until February and has leveled off considerably since then
  • There are fuel surcharges on all interstate HHG moves, a process that has been in place for over 2 decades

Fuel surcharges are determined by the average price of a gallon of diesel as calculated by the U.S. Department of Energy on the first Monday of every month. The new fuel surcharge (if a change is required) goes into effect for shipments loading starting on the 15th of that same month, through the 14th of the following month. This helps to level off any volatility in fuel prices.

Blog - Chart - Gas Diesel Prices

HHG Air/Sea Freight Pricing Volatility

Supply and demand has caused air and sea freight pricing to remain volatile around the globe. This has been compounded by the overall reduction of flights, leading to limited availability to air freight transport. Many in the industry are hopeful that we’ll be back on track within the next 12 months. 

Additionally, lift vans, a typical wooden container that is used in international shipping are in short supply. These containers wear out over time and need to be replaced. However, with the ongoing lumber shortage, replacements are more costly and more difficult to come by.

Continuing HHG Driver & Labor Shortages

Driver and labor shortages continue to plague the moving and storage industry (and other related transportation systems). The HHG industry has made sustained attempts at attracting talent with varied results. The recent uptick in volume and the increase in the costs of doing business has led to a more acute awareness of these shortages of key talent. The industry has been exploring the need for alternative modes of transport (such as small containerized shipments) and continues to utilize these methods when appropriate.

What Can Companies with Household Goods Shipments Do?

Many of the HHG transportation challenges facing the relocation industry are simply out of anyone’s control. Simply put, TIME has become the critical factor for many of these challenges. It will take time for these issues to unravel themselves:

  • Material supply will catch up with demand
  • The housing market will cool which will lessen storage demand
  • Over time, international ports will catch up with their backlog

However, for companies that need to relocate their employees, time is a powerful ally. Now, more than ever, companies should work to initiate their employees’ HHG services as early in the move process as possible.

  • This will allow your relocation team to set the right expectations upfront and will help to ensure your employee will arrive at their destination as quickly as possible, ready to work
  • The earlier companies can initiate relocations for their transferees, the sooner HHG services can be scheduled and coordinated
  • The more accurately a transferee can project their final move date, the more quickly the move can be added to the list of summer moves

Let's Talk!

Do you have questions about the current state of the household goods industry? Let’s talk! GMS is a leader in global workforce mobility. We help companies build and operate competitive relocation programs for their talent acquisition and retention strategies while minimizing common pain points, where possible. 

It is our goal to make every relocation experience a smooth one for those who are moving. Our services can help every step of the way, from pre-decision, to moving day, to getting settled in the new destination – GMS is here for you.

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Director, Transportation Services Ann has over 20 years of leadership experience in the moving and relocation industries. She is a council member for the International Association of Movers (IAM) Leadership Alliance. As a 2nd generation mover, Ann has worked in all areas of the industry from survey scheduling to claims settlement which has provided her with a well-rounded understanding of the ins & outs of moving. Ann is responsible for the day-to-day operations of the Transportation Team, the GMS Transportation Network, managing contracts, policy advisement, and monitoring quality.

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