With the world trying to adapt to the new normal brought about by the COVID-19 pandemic, retailers continue to face shortages of consumer products due to disruptions in the global supply chains.
The Delta variants, unresolved issues and the emergence of waves of fresh infections mean consumers are likely to face higher prices and fewer choices. According to CNN, companies such as Adidas, Crocs and Hasbro are already warning of disruptions as they prepare for the crucial year-end period.
During the beginning of the global outbreak in March 2020, supply chain management has had major problems to cope with an unpredicted demand for certain products when simultaneous restrictions for travel and production have been enforced and is still struggling to recover from this. Business operations are trying to adapt to the new situation and will probably face changes that will remain even after the pandemic might be over.
Moreover, shipping continues to be hit hard. Given ships transport around 90% of the world’s trade, the crew crisis is disrupting the supply of everything from oil and iron ore to food and electronics. Rolf Habben Jansen, Hapag-Lloyd chief executive, said the market situation is expected to ease only in the first quarter of 2022 at the earliest. According to data from London-based Drewry Shipping, the cost of shipping goods from China to North America and Europe has continued to climb over the past few months, following a spike earlier in the year. The company’s World Container Index shows that the composite cost of shipping a 40-foot container on eight major East-West routes hit $9,613 in the week to August 19, up 360% from a year ago.
The terminal shutdown in Ningbo, as per CNN, will add to bottlenecks arising from the closure in June of Yantian, a port about 50 miles north of Hong Kong, after COVID-19 infections were detected among dock workers. S&P Global Market Intelligence Panjiva pointed out that while a partial reopening of Yantian took only a few days, a return to normal services took nearly a month to achieve as the congestion spilled over to other ports. The report described this as trouble for retailers and consumer goods companies trying to restock inventories as 2021 heads to the year-end holiday shopping season.
S&P Global Panjiva, in a statement, said the closure at Ningbo is now particularly sensitive as it may hold up exports for the peak season of deliveries into the United States and Europe which typically arrive from September through November. As such consumer goods producers are taking drastic steps to meet demand, such as changing where products are made and moving them by plane instead of ship.
Adidas CEO Kasper Rorsted, told CNN Business, said the sportswear company will be unable to fully meet the strong demand for its products in the second half of the year due to the shutdowns, despite switching production to other regions. “Supply chain difficulties have been leading to significant delays and additional logistics costs, particularly as we have been making more use of airfreight.” Hasbro, which makes Monopoly and My Little Pony, said it is increasing the number of ocean carriers it works with, utilizing more ports to expedite deliveries and sourcing more products earlier from multiple countries. But consumers have to bear the price rise as Hasbro is increasing prices to offset rising freight and commodities costs. Furthermore, consumers should also brace for longer than normal delivery times and may need to have several different gift ideas up their sleeves.