What is happening with the global supply chain? The entire world is experiencing record shortages on everything from cars to coffee. But is Covid-19 to blame, or was the system filled with inadequacies?
Covid-19 Did Not Cause All of The Supply Chain Challenges of 2021.
Some have been as bold as to say that the Covid-19 Pandemic caused Supply Chain shortages of 2021 in the same way an Iceberg sank the Titanic. Or in the same way, the Lehman brothers’ collapse caused the 2008 Recession, or even in the same way the straw broke the camel’s back, as cleverly stated by Sam Denby of Wendover Productions.
But the reality is the Titanic’s faulty rivets would have sunk the ship. It was only a matter of time. If it was not the straw on the camel’s back, it could have been a fly to deliver the same fate. The Covid-19 pandemic successfully exasperated weaknesses in a system that was slowly reaching a breaking point.
Are Shipping Increases Here to Stay?
Shipping times have nearly doubled since the beginning of the pandemic in 2020, and the delays were in effect as early as May of the same year. Freight rates for physical products launched to prices higher than ever before, thanks to shipping rates. Ocean freight rates coming from China and arriving at ports on the West Coast went from $1,500 six months ago to $15,000 now – with no end in sight through 2022.
With so many products coming from China to the West Coast of the U.S. via barge, it seems logical to assume the excess in shipping times could be attributed to the Covid-19 pandemic, literally plaguing Mainland China. But the controversial yet seemingly effective lockdowns in Mainland China kept businesses in areas outside of Wuhan operating as usual.
So, Where are These Issues Arising From?
The real issues were arising here in the U.S., just off the coast of Los Angeles. The majority of imports into the U.S. come from Asia, and just shy of 50% of all of those imports go through one of two ports on the West Coast. One located in Long Beach and the other in Los Angeles, California.
Ships that would typically wait a day or so to dock in Southern California Bays for unloading spots at the Port of Los Angeles or the Port of Long Beach were now waiting ten days. When a barge from China only takes about two weeks, this added wait time at these ports effectively doubled the shipping time.
But pre-pandemic chaos, in February of 2020, the Port of Los Angeles and the Port of Long Beach saw a 31% increase in ship traffic and a 49% increase in container traffic. Numbers that were on track to exhaust healthy pre-pandemic workforces.
Then came Covid-19 in March of 2020 and shipping volume quickly ramped up. By the end of 2020, travel, entertainment, and restaurant capacity and use in many areas were limited. A win for eCommerce sellers, these restrictions resulted in retail shopping emerging as a source of entertainment for many. Online shopping blew up in areas it had never really gained traction before. Major online retailers like Amazon saw a 35-40% increase in traffic and profits. However, this explosion further fatigued the supply chains.
Port workers in Los Angeles and Long Beach were already overworked with excess unloading of material goods from barges. Empty containers that needed to be loaded up for their journey back to Asia were being put on the back burner, which caused a space shortage. This space shortage caused an unloading delay. This unloading delay was agitated by a truck driver shortage. All of these issues quickly snowballed into one big supply chain mess.
Who is Weathering the Storm?
Companies with pricing power are definitely at an advantage. Apparel companies and cosmetics companies are some industries with an upper hand right now. But you don’t have to sell sweatshirts or make-up to keep your business performing well.
So How Do You Remedy These New Supply Chain Challenges?
There are many available options and outlets to automate tasks and ensure operations run smoothly. But an easy and essential tool for reducing supply chain costs is to simply move your supplies faster. While moving inventory as a solution seems like a no brainer, actually doing it can prove to be challenging.
Benjamin Franklin was right when he said, “Time is Money.” The longer you hold inventory, the more it will cost you. One of the best things you can do for your supply chain is move products as quickly as possible.
A Healthy Launch
If you have new products to launch, you might want to consider Rebaid. An effective tool for a healthy launch, Rebaid helps maximize buying eyes on your product. With thousands of shoppers per day using the platform, your product is guaranteed visibility. Visibility that converts to sales and can even propel your listing to Page 1 of Amazon. Check out the article Amazon Growth Hacking. Get to Page 1 for Less.
Is It Time to Liquidate?
Even the most successful products experience lulls in demand, or a collapse in demand all together. If you have found yourself sitting on products that aren’t generating revenue, you may want to consider liquidation. “Time is Money”, and slow-moving products can and will negatively impact the cash flow of your business. Many sellers resort to discounts when it comes time to move products quickly- but if no one sees your discounts, they lose their efficacy. If you use a platform like Rebaid, you can rest assured that shoppers looking for deals will see your product.
In Summary
Supply Chain issues may be more complex in recent years, but tried and true solutions are readily available!
