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Christmas gifts stuck in the supply chain

It is a fact that China is the manufacturing powerhouse for Christmas presentations. But this year there seems to be an imminent delay for these gifts to reach millions of people around the world, as there has been increased congestion at ports in many countries. The retailers are apprehensive that deliveries for the holiday season could be delayed.

The supply chain crisis has largely been driven by the Covid-19 pandemic, with demand surging as economies re-open. Meeting that demand hasn’t been easy as producers are simultaneously dealing with labour shortages and a slowdown in the transport system.

In Asia, manufacturing hubs, like Vietnam, are just emerging from a wave of the coronavirus, causing a disruption in production. While China – the factory of the world – is also facing an energy crunch leading to shutdowns at manufacturing hubs and ports.

Containers shortage in China

The voyage for a container from Asia to the US generally takes just two weeks, but at the moment it is taking about 70 days from the product leaving the manufacturing site to reaching at the sales point in the US. That means even if a popular toy leaves China today, it now won’t make it to the shops in the UK, mainland Europe or the US in time for Christmas. That’s largely because the ongoing logjam at US ports is having a ripple effect back in Asia. Chinese ports don’t have enough shipping containers because they haven’t returned from the US.

Measures taken by the US are not enough

In order to cope up with supply chain bottlenecks and to ease the situation, the US President Joe Biden announced that the Port of Los Angeles in California would work around the clock. But not everyone thinks this will help enough at this point. As experts opine that these measures should have been taken much earlier and opening the ports 24/7 now won’t make much difference to the present logjam at ports. They opine that in order to solve the situation all parts of the supply chain – including truck drivers, train operators and warehouse operations need to add extra capacity.

US is the biggest importer toys worth over $17bn and if we add games and sporting goods to that list then the figure gets double and a large chunk of these products which is about 80 per cent comes from China. And many of these toy factories in China are located in a coastal province of Guangdong and this area has recently been hit by power cuts.

Experts in the industry feel that this logjam will last at least for another three months and the congestion will come back to Asia. They feel that there is always an imbalance of trade between West and East. Some experts opine that the supply chain problems will be resolved when shipping industry sees more containers coming on to the market next year. They are hoping that the present logjam won’t disrupt Santa Claus’ plans and Christmas too much.

Cargo backlog creates traffic headaches on sea and land

LOS ANGELES – A Los Angeles neighborhood just outside the nation’s busiest port complex has become a perpetual traffic jam, with trucks hauling cargo containers backed up day and night as workers try to break through an unprecedented backlog of ships waiting to unload.

About 40% of all shipping containers entering the U.S. come through the Los Angeles and Long Beach ports. The logjam of ships has interrupted the global supply chain and last week prompted the Biden administration to allow the port complex to operate 24 hours a day to try to get goods unloaded and out to consumers.

Since then, residents of the Wilmington neighborhood just north of the ports have complained that trucks are backed up in the streets at all hours. Meanwhile, cargo companies running out of space to store containers off-loaded from ships are stacking them outside overloaded warehouses and in parking lots.

This week a container slid off a truck making a turn on a narrow street, pancaking a parked car. Nobody was hurt, but local officials say with so many trucks crammed into a small area it was an accident waiting to happen.

“This is becoming an issue of safety,” said Jacob Haik, deputy chief of staff for LA City Councilman Joe Buscaino, who represents the working-class area. Haik said the city would start issuing citations to firms that stack containers unsafely or whose trucks clog streets.

As of Tuesday, there were 63 ships berthed at the two ports and 96 waiting to dock and unload, according to the Marine Exchange of Southern California that oversees port vessel traffic. On Monday, the number of ships waiting to enter the ports hit a record 100.

Wilmington resident Sonia Cervantes said her driveway was blocked by a truck as she tried to leave for work at 6:30 a.m. Her whole block is fed up with the traffic, she said.

“It’s a bunch of neighbors that are very upset because it’s a non-stop situation,” Cervantes told CBS LA.

Maria Arrieran, who owns the UCTI Trucking Company along with her husband, Frank, said she sympathizes with the community, but the truck traffic is a result of limited container storage.

“It’s an ongoing problem. We’re just trying to get these truckers in and out,” she said Wednesday. “I’m literally out on the streets directing traffic.”

California Gov. Gavin Newsom on Wednesday issued an executive order that aims to ease the backlog. He directed California government agencies to look for state-owned properties that could temporarily store goods coming into the ports. Newsom, a Democrat, asked the state’s Department of General Services to review potential sites by Dec. 15.

He also ordered the Governor’s Office of Business and Economic Development to examine other properties not owed by the state, such as private or locally owned parcels, that could also be used for storage, though he didn’t give a timeline for that review.

Newsom’s order is a start, Haik said, but he urged the governor to also allow cities to make it easier to change zoning rules. The city has identified several port-owned plots that could be quickly paved and transformed into storage sites if not for existing red tape, he said.

“The lots are quite small. But if you could pull together 10 or 12 lots, and put 40 containers on each of them, that’s 500 containers,” Haik said. “That’s some serious relief.”

More relief could come by diverting cargo ship traffic to the Port of Oakland. Mayor Libby Schaaf told KRON-TV on Wednesday that her city’s port “has unused capacity right now” and Oakland can “take some of those ships off your hands, L.A.”

A coalition of business groups including retailers, truckers, grocers and others said Wednesday that Newsom’s order doesn’t go far enough.

“There are additional real, tangible actions the governor could take to meet the moment and tackle this crisis head-on, but convening taskforces in 2022, delaying urgent actions for at least a month, and pushing funding discussions to the January budget proposal do not provide the sense of urgency needed to address this crisis now,” the coalition said in a letter.

The group urged Newsom to take drastic steps including suspending air quality rules governing truck emissions, allowing cities to drop prohibitions on unloading goods at stores after hours and expediting permitting processes for warehouses.

Ocean Shipping

Every business approaches shipping differently. And there are a lot of variables to choose from as you build your supply chain: the containers, shipping method, vendor manuals, and timelines can all shift based on your business’s priorities.

But we’ve seen that supply chains operate best when generally following the below process from start to finish.

  • Place purchase order
  • Communicate shipment details to freight forwarder
  • Freight forwarder picks up containers
  • U.S. Customs entry is filed in order to secure customs clearance
  • Container arrives at port
  • Container is loaded onto ship
  • Containers set off for destination port
  • Shipper provides documentation to consignee
  • Consignee reviews documentation, provides info to U.S. Customs
  • U.S. Customs reviews containers and documents
  • Containers arrive at port
  • Containers may undergo some form of customs exams
  • Once cleared by customs, container is attached to truck
  • Containers are trucked to distribution center
  • Consignee at the distribution center accepts containers

Phew! Supply chains have a lot of moving parts. This timeline is general, and just covers ocean shipping containers moving internationally from point A to point B. Your supply chain may be longer, shorter, more complicated, or less so.

Regardless, when all these components can work together efficiently, your business can improve your inventory turn — improving your ability to plan for the future as a result.