As our business and personal lives continue to be altered and ever-changing and as this global pandemic refuses to release us from its grip, the impact on the supply chain to consistently deliver a multitude of products will demand enormous patience and a focused effort on planning.
The disruption to the transportation system and ultimately how trade amongst every country takes place is not isolated to North America but moreover is a global dilemma.
In the harbours of many ports both on the East and West Coasts of Canada and the U.S., many ships are sitting idle—full of containers awaiting docking space to unload their wares.
Why the delay? The longshore workforce is being affected by the pandemic, whether short-staffed due to illness, short-staffed due to social distancing protocols, or simply short-staffed due to having to stay home to look after their children as many cities face full lockdown procedures which have closed the schools.
Added to this is the fact that as more and more families are now isolated and working and living from their homes, there has been a huge increase in demand for many items such as exercise equipment, office furniture, and sporting goods where demand has outstripped availability.
During the first phase of the pandemic in the spring of 2020, many factories were shut down or had their capacity dramatically reduced. The resulting impact was shipping companies took some of their ships out of service. When trade then opened up during the summer, the demand for goods and therefore containers skyrocketed and the result has been longer lead times to get goods off the loading docks, into containers and loaded on to ships. These conditions have increased the cost of transporting these containers to unprecedented levels!
Canada and the U.S. still rely on a multitude of products produced in Asia and Europe and for those countries, North America continues to be the largest consumer.
Demand for replenishment
Due to the shortage of ships and containers, once ships are unloaded, the demand for replenishment has resulted in many ships returning to their home base with empty containers, again driving up the costs from on average, $2,500 six months ago to $7,000 currently.
For those in the aftermarket, this means that our supply chain for vital parts and accessories could and likely will suffer from longer lead times, and higher prices as many companies cannot absorb all of the financial impacts.
To improve performance for North America where the demand continues to be high, many shipping companies are now returning empty containers from countries where demand is lower so that they can increase availability and begin to shorten the timelines.
As for vaccinations increase, and in some countries when life returns to a more normal state, the delivery performance should improve. What is encouraging however is that many companies are placing enormous efforts on their logistic and inventory planning process to adjust as quickly as possible to support our ASP’s!
The Aftermarket always changes and adapts to the times!
Robert Pitt has been in the automotive aftermarket since 1996 in the fields of sales, marketing and operations. Currently, he serves as President of Pitt Industries.
