Supply Chain NOT Improving




The supply chain is not and will not improve anytime soon. Gas prices will remain high for at least the next several months forcing up prices. You may have heard the government released leases on federal lands. These are a very small part of what was canceled at the beginning of the Biden presidency and will take months to a year before we see any benefit. The tucking industry still lacks drivers. China still remains the biggest contributor to the supply chain mess.


"Last May, the huge Yantian container terminal at the Port of Shenzhen throttled down to 30% of normal productivity for a month to stamp out a handful of positive cases there. Hundreds of thousands of shipments that couldn’t enter the port accumulated in factories and warehouses, and many vessels skipped the port to avoid waiting seven days or more at anchor. It took weeks after the port reopened to clear the cargo backlog. The effects cascaded to the U.S. and Europe, resulting in port traffic jams, transit times triple the norm and missed retail deliveries for the holidays.


The difference this time is that an entire metropolis — and highly interconnected global trade center — is essentially shut down. Not since the initial 2020 COVID-19 outbreak in Wuhan have lockdowns been this extensive in China.


Twenty-five million people in Shanghai have been sequestered for 18 days (now 21 days). Chinese authorities this week slightly eased the restrictions, dividing the city into three categories based on previous screenings and risk levels. People can wander outside their apartment buildings but are encouraged to stay home in neighborhoods with no positive COVID-19 cases in the past two weeks. Those in high-risk areas must still shelter at home.


Spanish financial services firm BBVA predicts Chinese authorities will stick to the “zero-COVID” strategy and lockdowns until at least June. Other China observers say it could take even longer to meet China’s infection standard.


Shanghai is one of the largest manufacturing centers in China, with heavy concentrations of automotive and electronics suppliers. It is home to the largest container port in the world and a major airport that serves inbound and outbound air cargo. Exports produced in Shanghai account for 7.2% of China’s total volume and about 20% of China’s export container throughput moves through the port there, according to the BBVA report.


Most warehouses and plants are closed, nine out of 10 trucks are sidelined, the port and airport have limited function, shipping units are stranded in the wrong places, and freight is piling up.


Export containers that were already at the Port of Shanghai when the lockdown started are making it onto vessels, but most goods booked on outbound vessels are stranded at warehouses because shuttle trucks can’t make pickups or deliveries.


Truckers require special permits, which are only good for 24 hours, as well as negative COVID tests to get in and out of the city or enter certain zones, according to logistics providers. Checking COVID certificates has led to huge traffic jams at the port.


The outbreaks have led to a virtual ban by authorities on truck drivers from high- and medium-risk areas transporting cargo to low-risk areas. That includes transporting cargo from Shanghai and Kunshan to the Port of Ningbo. No cargo will be accepted if drivers have been to medium- or high-risk areas within the last 14 days or the factory is located in medium- or high-risk areas, said UPS Supply Chain Solutions in a customer update.” https://www.freightwaves.com/news/get-ready-for-the-next-supply-chain-shockwave


As you see items on sale that will work for Thanksgiving and especially Christmas purchase them now. Lots of red items are available for Memorial Day and Fourth of July. Which will work for Christmas? Christmas items should now be in warehouses in the countries where they will be sold but they are stuck in China.


Manufacturing hubs in Vietnam and Cambodia are already suffering from a shortage of Chinese components. This will lead to limited supplies of electronics and appliances manufactured in those countries.


Plan ahead now and take advantage of end of season and holiday sales. Consider hand made gifts. It's time to be creative.


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