5 Reasons for the Current Supply Chain Crisis
#1 The Pandemic
Covid-19 caused an unprecedented increase in online orders, many for goods imported from Asia.
#2 A Lack of Containers and Staging Space
Containers leaving Asia aren’t returning quickly to be reloaded. Chinese import volume is up 54% year-over-year while U.S. export volume increased only 4.4%*.
#3 Congested Ports
Intermodal transportation is not equipped to handle the amount of cargo arriving at U.S. ports, causing congestion and an overload of goods. Another reason for the delay in returning containers to Asia.
#4 The Queue to Unload
Ships and trains are facing severe delays waiting for space to become available to onload their goods. Some ports and rail terminals are seeing wait times of up to a month, compared to the normal few days.
#5 Shipping Costs
Increased demand for, and decreased supply of, container space has resulted in higher shipping fees. Ocean freight rates are five times higher year-over-year, and space must be reserved a month in advance. There is no evidence that points to less spending on imports as the U.S. economy opens up.
Experts anticipate the supply chain crisis will continue into 2022, so what can you do to mitigate the impact on your organization?
- Source domestically. Work with U.S. based suppliers, vendors and partners to ease your reliance on overseas suppliers, and the cost and time associated with international shipping.
- Be proactive and agile. You may need to adjust product specifications, sizing, substrates or other particulars in order to take delivery when you want to.
- Be smarter about how and where you’re shipping. Instead of all shipments coming to your central warehouse, leverage the fulfillment and 3PL services of your supplier(s) to ship directly to your customers.
- Communicate frequently with your vendors and customer base about potential delays.
- Be patient as we all navigate this new normal.
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SOURCES
*FreightWaves
M.E. Dey & Co.
https://knowledge.wharton.upenn.edu/article/veeraraghavan-supply-chain/