Cargo rates and delays are proving a nightmare for many retailers, just when they should be making their largest sales push of the year.
For years, efficiency in retail has meant products arriving exactly when they’re needed. Storage is expensive, and keeping inventory on hand costs money it doesn’t make back until the moment of sale. Shipping professionals call this “dwell time,” and it is an expense with no related increase in value. So the global supply chain is, by nature, a lean machine.
But it’s exactly that leanness that has made it so vulnerable to interruptions in shipping and manufacturing. Usually, those are localized and small, meaning a retailer could just look elsewhere and still get their product on time. But for the past two years, that interruption has been global, and has affected every possible stage of manufacturing, storage, shipping, and delivery. From the sourcing of raw materials to the staff who put the product on the shelf to sell to you, every single stage of bringing product to the public has become complicated.
Take microchips, for example. Of course they’re in every electronic device, but these days they’re also in everything from cameras to cars. Early in the pandemic, as electronics purchases skyrocketed, production shifted to match, which caused shortages elsewhere. Most varieties of microchips are 4-5 months backordered. So the fact that it’s hard to find a new Subaru Outback today is partially because everyone wanted a Nintendo Switch in June 2020.
Production of most products is recovering from pandemic slowdowns, but the backlog of shipping those backorders is another bottleneck – new product simply has no space to be stored while old cargo is being moved. And at every point in the supply chain, there’s still a shortage of workers.
So when it’s hard to find the popular toy you want on the shelf this Christmas, or holiday lights, or the swimsuit you want to buy for your holiday travel, know that you’re not alone, and the people selling you those things have done nothing wrong. It’s a global problem, and we’re all in it together.
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