Even with the number of container ships down from a few months ago the demand and capacity issues are predicted to get worse. The backlog that is piling up in Asia will make it extremely difficult in the coming months to secure a spot on a ship. Spot rates continue at their near all time highs, causing many importers to struggle getting loaded. Container shortages have been exacerbated after the Ever Given incident in the Suez Canal and may take another 4 – 6 weeks to return to normal.
The Semiconductor chip supply constraints have disrupted various manufacturing sectors causing a massive reduction production for electronics and automobiles. Overcoming this shortage and high demand will take a while so in the meantime chip manufacturers like Intel have began outsourcing to keep pace with competitors. Sales for laptop chips rose over 8% due to the sudden rise in remote work/learning. Intel is bidding on government contracts to help fund domestic semiconductor chip manufacturing.
Longshoreman in the port of Montreal began their strike on April 26th causing all cargo operations almost all cargo operations to shut down. However, the federal government plans to get workers back on the job by introducing new legislation that would end the strike. The work stoppage at the port is causing serious harm to Canada’s economy and may have long lasting effects to already stressed supply chains.
WHAT CAN WE CONCLUDE FROM THIS?
With demand at an all time high, during historically the slowest month of the year creates an uncertainty of whether we will see any relief at all for the rest of 2021. Consumer spending is still incredibly strong for online retail and that demand is continuously increasing even during the receding pandemic. As a company do you pay the additional cost to get your product on the ships now or do you wait it out and hope the market changes in your favor?
Solutions around these demand and capacity issues may include shipping to other West Coast ports including Seattle, San Diego, or Portland. Additionally, one could consider nearshoring as an option rather than having your products shipping from Asia.The higher degree of company control within your supply chain the lower the risk, at the same time outsourcing non-strategic parts of your value chain still makes sense to ensure that your focus stays on areas that helps drive revenue. This is not a question of insourcing but nearshoring, shorten the lead time in all areas of your supply chain will reduce risk.
MVP Logistics is here to answer all your questions about your supply chain and what steps we are taking to plan for and address the outbreak. For a breakdown of your supply chain, contact us virtually or give us a call at 1-888-390-5320.
MVP Logistics is your 3PL logistics partner for supply chain project management, logistics, warehousing and fulfillment, LTL, and other supply chain needs. Our Minneapolis, Houston, and Los Angeles area warehouses provides local, national, and international shipping services. Find your solution today.