Another substitution? How can the shipment be delayed again? Why are these the only options? If you’ve recently uttered these questions in frustration, we completely understand. The past eighteen months have created the perfect storm of circumstances resulting in significant supply chain challenges across all industries. The record blockage of cargo ships in California is just another example of the ripple effect of these issues. Having some context to the underlying causes of product shortages and delays can help all of us better understand the impacts they have on product pricing and availability at a high level. After reading through the four primary challenges, we’ll focus on how we can address them together.
Importing challenges include the dramatic 300% year-over-year increase in ocean transportation costs and the difficulty in getting transport containers and space on a ship.Congestion at ports and backlogs in rail and truck deliveries also contribute to delays. For example. 2021 has seen a record blockage of cargo ships in California, with 73 waiting to unload cargo on September 19th, 2021. As ships have tried to move to other ports, congestion has followed and further complicated the shipping schedules for upstream distribution. Shipping and material costs have also been on the rise. In fact, the price per container has increased from about $3-$4k to $20-$35 since March 2020!
Critical raw materials are in shorter supply and have become more expensive. For example, cotton has increased an average of 31% year-over-year, mainly due to the prohibition of Xinjiang cotton (which, by some reports, accounts for up to 20%of the world’s cotton). In the first three months of 2021, the global price of wood pulp, a primary component in manufacturing cardboard, was also up 30 percent.
From hospitality to retail, many industries are struggling to attract and retain workers. This is especially true in the manufacturing and transportation industries where job openings are up 30% over pre pandemic levels. With more jobs than interested and available workers, delays are inevitable. COVID protocols at the ports have reduced the workforce available to load and unload containers, and the lack of truckers and rail service workers fail to keep the product moving upstream. In addition, Delta variant outbreaks also continue to impact staffing.
The depreciation of the U.S. dollar against many global currencies, including the Chinese Yuan and Honduran Lempira, and tariffs, have increased suppliers’ overhead. Since vendors are paid in local currency, when the dollar weakens, that means they are earning less in local terms than they did when the dollar was strong.
You’ve heard again and again, order early.This year, this advice is even more critical. Our suppliers are telling us to place holiday orders by mid-October. If we have more time, we have better chances of securing the products you want.
Be flexible as you may need to look at substitute products, higher shipping costs, and longer wait times. We’ll work with you to create backup plans and ideas, and it’s great when you can keep an open mind to these options. Being flexible allows us to best help you meet your overall goals!
One option to potentially mitigate the fallout of supply chain challenges is to open an online company store, if you don’t already have one. An online store provides you with greater control and access to your promotional items. Working with your dedicated account manager, you can purchase inventory so that your branded merch is already on the shelves in our warehouse and ready to ship.
It can be easy to point fingers and look for someone to blame when a deadline is missed or you can’t get the specific item you wanted for your project. That wasted energy doesn’t solve the problem. Instead, Foxtrot is committed to open, transparent communication about what is happening and what we can do to address the situation. For example, we are partnering with our suppliers to minimize inventory issues by carrying more stock, ordering further in advance, and focusing on domestically made products.
While these challenges will be with us for the next couple of months, there’s nothing we’d love more than to partner with you today to anticipate your branded merchandise needs.