Supply bottlenecks leave ships stranded and businesses blocked


NEW YORK (AP) – A trade bottleneck stemming from the COVID-19 outbreak has American businesses eagerly awaiting Asian goods, while off the coast of California, dozens of container ships are at anchor, unable to unload their cargo.

The pandemic has wreaked havoc on the supply chain since early 2020, when it forced the closure of factories across China. The seeds of today’s troubles were sown last March, when Americans stayed home and dramatically changed their shopping habits: Instead of clothes, they bought electronics, fitness equipment, and home improvement products. American companies responded by flooding reopened Asian factories with orders, setting off a chain reaction of congestion and roadblocks at ports and cargo centers across the country as goods began arriving.

Main Street businesses are now forced to wait months rather than the usual weeks for a delivery from China, and no one knows when the situation will be resolved. Owners explain a lot to customers, order more inventory than usual, and lower their expectations of when their shipments will arrive.

Alejandro Bras used to be able to order from factories in China and expect to receive his products in 30 days. Now, with problems throughout the supply chain, “we are adding an additional two months,” he says. And those two months is “doubtful”, it can take even longer.

Bras’s company, Womple Studios, sells monthly subscription boxes with crafts and educational activities for children; many of the products are custom made, so you cannot easily find substitutes.

Bras has found himself spending more time on logistics than product development, and more time apologizing to the company’s Oakland, California customers who expect a shipment each month. Customers have been understanding: They have realized that the pandemic has affected transport and commerce around the world.

The group of ships at sea is perhaps the most dramatic symptom of an overwhelmed supply chain. As production increased in Asia, more ships began arriving in the ports of Los Angeles, Long Beach and other West Coast cities in the fall than the gateways could handle. Ships with up to 14,000 containers have been on the high seas, some of them for more than a week. Sometimes there have been as many as 40 ships waiting; Typically, there are only a handful, according to the Marine Exchange of Southern California, a service that monitors traffic and port operations.

“With this kind of build-up, it will take several weeks to fix. It does not disappear. And new ships are sailing to the United States even as we speak, ”says Shanton Wilcox, manufacturing consultant for PA Consulting.

But there are also choke points on the ground. It can take 8,000 trucks to pull cargo off a ship, says Kip Louttit, executive director of the Marine Exchange of Southern California. But when all those trucks hit the road, there aren’t enough available when dock workers try to unload the next ships in port. Rail freight traffic has also been affected.

“When you have more cargo, you have a less efficient cargo moving system,” says Louttit. The pandemic itself is also slowing the flow of goods, bypassing workers in port warehouses, he says.

Putting all the problems together, when a ship arrives in port, it takes five to seven days to unload instead of two to three, says Shruti Gupta, an industrial analyst at consultancy RSM. “That again has consequences for the truckers and the rail service, because they have to wait until the port clears,” he says.

Businesses are also waiting due to the high demand for space on ships and within shipping containers ranging from 20 to 45 feet in length.

“Typically a shipment can be booked with a couple of days’ notice and you currently have to reserve containers 30 days in advance,” says Peter Mann, CEO of Oransi, a Raleigh-based manufacturer of air cleaners and purifiers. , North Carolina. You have to factor twice the normal shipping times into your operational plans.

When Mann started having trouble receiving shipments in the fall, he decided to place larger orders – getting the products manufactured wasn’t a problem, and fewer deliveries meant less wait time. It has meant investing more money in inventory.

Supply disruptions can be a more serious problem for smaller companies because, unlike larger companies, they may not be able to move production to other countries – for example, nations in the Western Hemisphere whose products can be shipped to the ports of the east coast. And large companies can afford to use air freight, which is more expensive than shipping.

Because there is so much competition for containers, the cost of importing is increasing.

“The price can be up to five times higher than usual,” says Craig Wolfe, whose company, CelebriDucks, has had trouble sourcing rubber ducks from China since the start of the pandemic.

One of Wolfe’s shipments stayed at the dock for three weeks because there were no wagons available. Another that was expected to ship in mid-February has yet to leave China.

“It would have arrived by now,” says Wolfe, whose company is based in Kelseyville, California. He is eager because most of his products are not your typical rubber ducks, they are based on presidents and other celebrities and pop culture trends like the Harry Potter books and movies. Like Mann, he has placed some larger orders than usual to make sure he has enough stock.

Exporters are also feeling the impact of bottlenecks. When containers are unloaded at ports, many are shipped empty to Asia rather than being held and filled with American goods.

Isaiah Industries sells its metal roofs to Japan, “but we are having huge delays in scheduling the containers for shipment. So we’re sitting here with orders and products to fulfill those orders, but there’s no way to ship them, ”says Todd Miller, president of the Piqua, Ohio company.

Miller is also expecting shipments of raw materials from overseas, including sheets commonly known as tar paper that are placed under shingles. Its problem is that it is competing with all other importers for space on container ships.

“We can produce it, but it will take four to six weeks before they can load it onto a ship,” he says.

.

Source link