COVID-19 spawned unprecedented challenges for international trade, particularly with the North American supply chain, where there’s never been a bigger imbalance between imports and exports.
For a variety of reasons, U.S. manufacturers and suppliers couldn’t meet surging commercial and consumer demand. This caused businesses to increase Asian imports dramatically, creating a demand swing unlike anything ever seen.
To say the least, it’s been messy.
- There aren’t enough ships to meet demand at present, which is causing delays and increasing prices.
- Due to the global imbalance of exports between Asia and the rest of the world, containers are out of position. Shippers now have instances where they have a confirmed slot on a ship but no container to load their finished goods.
- Shipping guarantees are no longer ironclad. Shippers who have guaranteed space for a sailing at lower prices are finding their space is getting auctioned to bidders willing to pay a premium, and their shipments are getting rolled to later sailings at the last minute.
- Increased shipping traffic means increased docking demands at ports. With no available dock space, many ships are forced to anchor and wait, delaying offloading for weeks.
- Once on the docks, there is a dockworkers labor shortage because of COVID-19 concerns, so offloading often takes longer than before.
- Once offloaded, there’s a shortage of trucks and truck chassis. Deliveries that once took 48 hours or less now can take weeks.
- The cost of shipping a container of goods from Asia has risen by 80 percent since early November.
- As for prices of manufactured goods, of the 18 major commodity groups from which most everything is made, 16 have seen double-digit price increases over the last two months.
To quantify: A delivery from China to Miller Zell’s Atlanta headquarters once took 30 or fewer days. Now, it can take in excess of 60 days. And costs more.
That said, we also take great pride in noting that we are meeting our clients’ delivery dates and pricing numbers in just about every case.
Miller Zell will do everything it can to take care of its clients. Our global sourcing team is working closely with our freight forwarders and factory partners to mitigate disruption and delays.
These are challenging times for managing public spaces. Customer demands have changed, and retailers, restaurants, banks and universities need to meet those new expectations, both in terms of safety and convenience. But renovations of these environments, particularly at scale, are more expensive and logistically complex than ever before.
That’s why it’s critical to work with a trusted partner who knows the ins and outs of the international supply chain and provides transparent communication on timelines and pricing.
For example, the West Coast ports in Los Angeles, Long Beach, Calif., San Francisco and Seattle have been overwhelmed, and import volumes are expected to remain at unprecedented levels well into the second quarter. This cargo crunch was not expected and it’s uncertain how long it will last.
Meeting budgets and timelines often requires creativity, not to mention experience dealing with these sorts of challenges. While some of our competitors were stuck with struggling West Coast ports, Smith and his team were able to reroute some deliveries to the East Coast through Savannah, Ga.
Conversely, when a shipment that was scheduled to port in Savannah encountered some unexpected delays, we rerouted it to LA on a smaller dedicated steamship line that has a private dock. With trucks and drivers in limited availability, we are using another partner’s drivers to avoid delays at the port that would be up to ten days or more without them. With no warehouse space available, we went to a long-term factory partner and secured space in their warehouse for distribution. The end result will be an on-time delivery.
Beyond being nimble with shipping, Miller Zell also makes sure to work with a diverse crew of long-term supplier partners — both manufacturers and distributors — thereby ensuring our clients benefit from consistent supply sources and the best possible pricing.
It’s accurate to say that little is easy on the supply chain at present. These challenges are expected to remain in place at least through the second quarter, as demand remains high, and manufacturing and shipping backlogs from the Chinese New Year are completed and shipped out after the national holiday.
But COVID-19 cargo crunch or not, Miller Zell will find solutions for our clients, whether that’s about creating a purposeful design, scaling a refresh for thousands of stores or overcoming supply chain and logistical challenges to deliver on retail projects, on time and on budget.
That is what we’ve always done and what we will continue to do.