Good Luck Test to Fix the Supply Chain Crisis

Cole’s experience highlights the various factors that now constrain the world’s supply chain. First, the manufacturing of things was wrong, which Cole’s suppliers blamed on China’s power ration as the country tried to distance itself from coal power; then Cole’s contacts in China could not find a cargo ship to fulfill the order. Cole believes his two 40 -foot shipping containers will be loaded onto a ship near Shenzhen on Nov. 13, but the items have not yet reached sea until Nov. 19. -day cruise between Shenzhen and Sydney, but they added another three days, ”Cole said. He’s not sure things will get off the coast anyway, and there’s no guarantee that part of Australia will be smooth, though. “It’s usually a two -day transfer to get things from the port to the warehouse, but I really don’t have the confidence,” he said.

That inability to track orders accurately is an issue throughout the shipping supply chain, according to Levinson, and it exacerbates broader issues. “There is no real-time tracking of most of the shipments operating in the freight system,” he said. “So things are scattered into the four winds and things are gone.” That uncertainty was compounded by the severe disruption of the supply chain last year, from the last-minute closure of ports due to the Covid attacks — like what happened in Ningbo, the third busiest port in the world, in August 2021—of the temporary blockade of the Suez Canal, where 12 percent of all global trade passed, in March 2021. China also asks 20 of its largest cities and provinces to reduce energy consumption for the remainder of the year to test and achieve environmental targets, causing factories and industries to work only part of the day.

The result? A global slowdown in the supply chain is putting everyone in turmoil — and making shipping things around the world more expensive than ever. “The shipping economy is good for shipping lines,” Levinson said. “They’ve found a record revenue.” While shipping rates have long been unbalanced, with the higher cost of shipping a shipping container from Asia to Europe than from Europe to Asia, costs across the board have increased. Shipping a 40 -foot container from Shanghai to Los Angeles in early August 2019, for example, costs $ 1,700. A year later, it had risen to $ 3,000. By August 2021, it was worth $ 10,200, according to data tracked by analyst firm Drewry World Container Index. Cole previously paid about $ 2,500 to ship a 20-foot container from China to Australia. Now it’s $ 5,500. “I was a little worried when I saw the bills on my 40-foot containers,” he said. “I can’t get the bills until the container arrives at the port.”

At such a high price, many large businesses are avoiding the traditional shipping industry and going it alone, finding it more economical to do so. Costco has leased three container ships to work to deliver U.S. and Canadian goods from production facilities in Asia, such as Walmart, Ikea, and Home Depot. “The factors of inflation are on the rise,” Costco chief financial officer Richard Galanti told investors when announcing the company’s latest financial results. “Higher labor costs, higher freight costs, higher transportation needs, and port delays, increased demand for certain product categories, various shortcomings of everything from computer chips to oils and chemicals, and higher commodity prices ”all have an impact on the retailer’s business. , added Galanti. Those who do not charter their own ships feel the impact. Half the lingerie retailer of Victoria’s Secret products trapped at sea. Some were flown in — but it would take nine days instead of two, because the race to get supply flights was also causing backlogs there.

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