China’s manufacturing powerhouse makes Christmas possible for many millions.
For weeks, however, congestion has increased at ports across many countries. Retailers are voicing concern that holiday deliveries could be delayed.
Rachel Teller from New York says, “I’m buying everything for my daughter’s birthday.” She is anticipating a shortage of toys and subsequent price hikes.
Covid-19’s pandemic has driven the crisis. As economies reopen, demand surged.
It has been difficult to meet this demand. Producers are also facing labour shortages as well as a slowdown of the transportation system.
Manufacturing hubs in Asia like Vietnam are still recovering from the wave of coronavirus. This has caused disruptions to production. China, which is the factory of all the world, faces an energy shortage that could cause shut downs of manufacturing hubs or ports.
Peter Sand, principal shipping analyst of industry body Bimco, says that a container traveling from Asia to the US typically takes two weeks.
It takes about 70 days for the product to reach the US sales office from the time it leaves the factory.
It means that even if an item is popular, it will not make it into the UK, Europe, and the USA in time to celebrate Christmas. This is due to the fact that there has been a massive logjam in US ports, which is creating ripple effects back home.
According to Alvia Ea (chief executive at Haulio, Singapore’s biggest container-haulage platform), Chinese ports lack enough shipping containers due to the fact that they haven’t yet returned from America.
Due to the spread of Covid-19, Ningbo’s container port, which is one of China’s most important, closed partially in August. A second port, Shenzhen, was also shut down in May.
Joe Biden, the US president announced that Los Angeles’ Port of Los Angeles would be open 24 hours per day in an effort to alleviate the problem. Not everyone believes this will suffice at the moment.
- LA port will be open 24 hours a day to handle the queues
- Shops warn about Christmas delays and shortages
- Logjam of container containers engulfs UK’s biggest commercial port
Sand remarks that “if only this action had been taken twelve months ago, US logistics could be in a better place today than it is.” It is not enough for ports to be open round the clock.
He says that in order to solve the problem, all components of the supply chain (including truck drivers and train operators) must quickly “add capacity”.
The US is, by far, the world’s biggest importer of toys, buying more than $17bn (£12.4bn) worth of them. The figure is almost twice as high if you consider games and sports goods. About 80% of these products are from China.
A lot of China’s top toys factories are located in Guangdong, a province on the coast. However, it has been recently affected by severe power outages.
Businesses already dealing with rising raw material costs and coronavirus lockdowns are facing additional challenges due to the energy crisis in Asia’s second-largest economy.
Some manufacturers began to shift production from China to other countries before the pandemic hit.
Fredrik Gronkvist from Chinaimportal.com is an advisor service for businesses making products in Asia. He says that the countries are now facing challenges.
“Ho Chi Minh City is one example of the fastest-growing manufacturing centers in the world and was placed under tight lockdown over the last few months.”
It comes down to toys. “China is also strong when it comes to plastics. China has a large industry of tooling and injection mould makers that are essential in the toy manufacturing process. These are not the same things that you can replicate elsewhere within a matter of years.
How long can the logjam continue? Mr Ea states that the choke may be re-established in Asia three months from now.
But that’s cyclical. Because there’s an imbalance in trade between East and West, it has always been this way.”
As more shipping containers are on the market, he expects some supply chain issues to be solved next year.
According to Mr Ea, “The world is adapting to Covid being an endemic.”
Global supply chains are being disrupted by many factors. The world should adjust.
It is hoped that it won’t cause too many disruptions to Santa Claus’ Christmas plans.
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