The global supply chain is like a domino track; if one piece is affected, other pieces topple all over the globe. Right now, there are dominoes falling across almost all industries, causing price increases, supply shortages, and shipping backlogs at major ports.
Until recently, the delays have mostly been limited to hard goods. The apparel supply chain traditionally has more country of origin diversification, insulating it from some of the issues facing hard goods, which are mostly manufactured in China. However, apparel's versatility is now being put to the test.
Jonathan Gold, vice president of the National Retail Federation’s supply chain and customs policy, commented, “It starts overseas with the foreign factories that were obviously impacted because of COVID, and have had issues getting staffed back up to be able to meet the consumer demand that we’ve seen.”
In the US, retail shopping is booming, creating demand last seen for apparel before the pandemic. The problem, however, is that the global shipping economy is not yet in a “post-pandemic state."
Another contributing factor is that such a large percentage of the population was confined to their homes last year. This fueled dissatisfaction and resulted in consumer spending on new desks, more comfortable chairs, higher resolution computer monitors, etc.
Most of these products are made outside the US. Domestic wholesalers and retailers are struggling to rebuild inventories depleted by shoppers in the early months of the pandemic.
Inbound sea shipments to the US began surging late last summer. The Los Angeles area ports, which handle about one third of US imports, saw an extra 57 ships arrive last fall.
The deluge of shipments has continued, reaching its acme in February 2021 when 177 container ships, carrying in excess of 800,000 containers, descended on the southern California ports. This represents a 31% increase in ships and a 49% increase in containers over February 2020.
Transportation mechanisms onshore - terminals, trains, trucks, warehouses, forklift drivers - are not yet up to speed, with a fraction of many workforces still compromised by COVID related concerns.
More cargo, complicated by the lesser efficient system ashore, has caused the ships to back up. To tackle this, the port's short-term strategy focuses on maximizing efficiencies and asking importers to retrieve their cargo more quickly.
“This shipping crisis," stated Nate Herman, senior vice president of policy for the American Apparel and Footwear Association, "is threatening to leave store shelves empty, which is particularly concerning for our industry as we get closer to back to school and move into the holiday season.” Typically peak traffic season at the ports starts in August when back-to-school and year-end holiday goods start funneling in.
An average of 30 container ships sat anchored daily off the coast of Los Angeles earlier this year. Seeing vessels anchored outside the nation's largest container port is not an everyday site. In fact, it typically only occurs once a decade. The port of Los Angeles pre-pandemic was accommodating an average of 10 container vessels a day. Currently, that average has risen to 15 vessels per day.
Shipping experts are guessing that these obstacles aren’t going to vanish any time soon, possibly not until 2022. In anticipation of these challenges, Adform Creative is sourcing products far in advance to circumvent the port bottlenecks and ensure we meet the increase in demand this year.
We have made every effort to optimize costs throughout our supply chain, despite the rising cost of raw materials, labor, transportation, tariffs, and shifting exchange rates. We are doing everything possible to maintain existing pricing and remain honest and realistic about lead times. The best hedge against delays is to order early and plan accordingly.