In a time where the pandemic is placing an unfortunate stronghold on businesses and families, we forget how hard it has become to maintain appropriate inventory levels and meet projected delivery dates. With a majority of US goods being manufactured in China, the media does not find it important enough to report the ongoing logistical issues China and US companies are facing. China New Year is quickly approaching and manufacturing production will be slowing down early this year in order to keep workers safe during this difficult time.
In addition to precautionary Covid-19 measures being taken, there is a significant container shortage in China making it next to impossible for companies to gain access to a shipping container to move inventory. Due to the pandemic, incoming containers in the U.S. and EU are being processed very slowly. This is causing a slow down in empty containers making their way back to China in a timely manner, hence the shortage.
Fortunately, large corporations such as Wal-Mart, Target and Amazon just to name a few, have contracts in place with shipping agencies allowing them access to shipping containers on an "as needed" basis with built-in shipping costs. However, medium size companies exporting from China are not so lucky. If a smaller company is lucky enough to locate a container, load their goods and get on a vessel, they are absorbing significant cost increases in shipping products.
Aside from the container shortage, there are also fewer vessels leaving for the US. that makes it extremely difficult to even get your container loaded onto the vessel. Six months ago an average container shipped at a rate of approximately $4,000. Since then, prices have nearly doubled ranging from $6,000 - $8,000. These unexpected costs are eating into ROI's resulting in significant unexpected cost increases.
With Chinese New Year approaching, many companies are very concerned having their backs against the wall. With previous ETA's estimated at 60 - 75 days on the east coast from the date of the container leaving China, many companies are now forced to project anywhere from 90 - 120 days. This is going to have a significant impact on inventory level in the U.S. and should cause great concern for the welfare of smaller companies unfamiliar with these ongoing issues.
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