By: Maggie M. Barnett, Esq., COO of ShipHero
Despite everyone’s best efforts, the strain from COVID-19 is not diminishing. And it seems as though it will spill over into the holiday season. Oh good. (That was sarcasm.)
There’s been a lot of news lately about carriers and the challenges they’re facing, as well as how some larger brands are handling this challenge. There’s also been discussion about how these supply chain disruptions could easily get passed along into 2022 and 2023. The intent of this article is not to make anyone panic, but it’s important to level-set expectations and understand where things stand in the eCommerce space.
Delays, Delays and More Delays
According to data from the Port of Los Angeles, the time it takes a shipment to travel from China to the U.S. has increased 83% over pre-pandemic numbers. That’s an additional 73 days. And in retail, that is an eternity.
There’s also been reports of materials shortages. The chip shortage affecting the auto industry is the splashiest one, but now toy manufacturers are raising their hands to say that a shortage of resin is impacting their ability to make toys and get them to suppliers and retailers. So, not only are manufacturers and retailers finding it difficult to get product from China and other countries to the US and into their warehouses, now there are shortages that could prevent those products from being created at all.
The Big Guys Will Spend
Another recent development this week was news that large corporations like Home Depot and IKEA are willing to spend big bucks to charter cargo carriers in order to ensure delivery. This has resulted in some organizations also purchasing their own shipping containers (which are also facing a shortage). As demand for charters has increased, so has the cost.
Larger companies can afford to pay these exorbitant fees, but of course, smaller eCommerce retailers cannot. Plus, eventually the additional cost will have to be passed on to the consumer somewhere. There is very little chance that these companies will see these additional fees as just “the cost of doing business.” This could lead to inflation that for the most part has stayed relatively steady throughout the pandemic.
Chartering cargo planes has also become trendy for larger companies. Overall, the pressure to receive goods in time for the holidays is real. Shipping containers full of sellable merchandise won’t do the retailer any good, if it’s still sitting in a port halfway across the world when Christmas rolls around.
No One is Immune
A labor shortage combined with a supply chain shortage is a recipe for disaster, and we seem to have just yelled, “Bingo!” With companies, including carriers like FedEx still struggling to hire, packages are now taking even more circuitous routes to get to their destinations. FedEx Ground recently reported that around 25% of all of their shipments are being re-routed to different distribution centers to offset the labor shortage. Currently, FedEx estimates they are working with around 65% of the staff they need.
The United States Postal Service is set to levy surcharges to retail customers in an effort to deliver the mail on time. With horror stories in 2020 of people not receiving holiday gifts until January or February, the post office is enacting additional charges in an effort to get things delivered on time.
Is There Another Word for Unprecedented?
It’s been said often enough since March 2020 – everything we have experienced, whether personal or professional has been unprecedented. The 2021 shipping carrier crisis seems to be another item to add to the list.
Anecdotally, consumers in general are really starting to feel the effects of empty shelves. Earlier in the year, missing or understocked products were the exception. Now, people are noticing more and more items missing. Everything from sports drinks to Steam Fresh bags to canned goods to chicken wings have been running in short supply. While the USDA says there is currently not a nationwide food shortage, the pinch of low inventory is being felt by more consumers than earlier in the year. And the haunting look of empty shelves doesn’t help to quell consumer anxiety.
These shortages could lead to more consumers shopping earlier for the holiday season, choosing to snap up gifts and items they need instead of waiting for a sale or promotion. However, it’s still too early to tell if this is a trend that will bear out. As with many things surrounding the pandemic, we are in wait-and-see mode.
Keep Calm and Ship On
The best advice for any eCommerce retailer right now is not to panic. Stock the products you can get; use your historical reporting to make a list of SKUs that drive revenue. Focus on the things you can control, like warehouse efficiencies, employee satisfaction and shipping, and do your best to let go of the things you can’t (like cargo ships sitting in the Pacific Ocean). With so much uncertainty surrounding us, focusing on yourself and your organization is the key to success.
If you’re new to ShipHero Fulfillment, please schedule a meeting today with our experts to learn more about how we can help you get your orders picked, packed, and delivered with our fulfillment service. No setup fees – simply pay as you go. ShipHero works to ensure that organizations invest in the solutions that match their needs, to improve productivity, revenue, and success.
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Maggie M. Barnett, Esq., COO
About the author: Maggie M. Barnett, Esq., is the COO of ShipHero. She is responsible for planning and executing the overall operational, legal, managerial and administrative procedures, reporting structures and operational controls of the organization. Barnett’s greatest strengths are leadership, risk mitigation, change management and a passion for business transformation. She is known for her expertise in delivering operational excellence and an ability to provide guidance and mitigating risk. Her leadership of ShipHero is grounded in a servant mentality, always doing the right thing for our stakeholders. Her passion for ShipHero comes from the ability to drive operational excellence throughout the organization impacting the lives of our employees, customers, and partners.