The cost of moving household goods has skyrocketed since the onset of the pandemic. Josh Morales, CEO of International Van Lines, in an interview last August with Forbes Advisor Home, explained after Covid-19 hit the United States, manufacturing across relevant sectors slowed and gas prices increased. “Everything from [the cost of] packing supplies to trucks increased. Therefore, moving costs increased.” In addition, a severe staff shortage, particularly for drivers, has pushed up labour costs and contributed to service quality problems and delays. And, of course, it has been no different in Canada.
The shipment of household goods represents a substantial portion of the relocation expenditure. In the case of traditional fixed-services programs, this increase is absorbed by the transferring organization. Employees who are asked to coordinate their move with a lump sum benefit are the hardest hit, as would those who must fund that part of their relocation through a flex account. In both these cases, the increased expense means that they may have to forgo another needed service, which in turn will diminish the overall relocation experience and possibly the success of the transfer. Candidates may also push back on accepting an offer if they feel they won’t be adequately supported through the move.
Whether it is the organization or the transferee feeling the pinch of increased moving costs, there are a variety of options to consider in addressing issues of cost constraint, transferee experience and acceptance rates.
When dealing with Lump Sum or other fixed amount programs (e.g., a Flex account), the most obvious solution to maintaining positive transferee experience is to adjust the benefit calculation formula to compensate for the increased costs. This will also reduce any hiring manager frustrations that inevitably follow lower acceptance rates and employee exasperation.
If increased funding for the mobility program is not possible, or if it is but to a lesser degree than required, consider the following:
1. At the program policy level
– Where services are provided through a traditional fixed-service program, give thought to transitioning to a Core/Flex approach giving transferees the flexibility to direct available funds in the Flex account to services specific to their needs without increasing costs.
– If moving services are already covered through a Core/Flex program, consider recalibrating the two program modules (automatic ‘core’ benefits versus a ‘flex’ budget to cover selected services) to maximize opportunities for reallocation of unused funds.
2. At the benefit administration level
– Align moving requirements with companies that offer services designed specifically for lump sum benefit recipients (including those using a Flex account). The service offering includes several options to choose from to help keep costs within the assigned budget.
– Seek out suppliers that can arrange alternate transportation methods, such as container systems and intermodal shipping (where movers at origin and destination pack, load, unload and unpack containers as is done for international shipments) during periods of overcapacity and resulting higher cost of traditional transportation.
– Rather than moving household goods, assist with furniture disposal or donation at origin, and furniture lease or purchase at destination.
* More typically a feature for international relocations for which shipping is costly and slow, this strategy can be as beneficial for domestic and cross-border moves.
* Household items and furnishings at origin can be loaned/gifted to friends/family or donated to charities. Most moving companies will dispose of items at a small cost.
* Transferees may well appreciate the opportunity to adapt their furnishings to their new living environment.
– Discourage storage at origin. Transferees often find that many, if not most items placed in storage during their time away are no longer wanted upon their return (children are older, home décor or layout has changed, etc.).
The moving industry is in transition, and the pendulum is in full swing. We recently undertook to survey moving companies on the effects of the pandemic on their operations and how they see the business evolving going forward. Look to our next blog for the results. In the meantime, we are happy to be of assistance with any of the solutions touched on in this blog.