It’s fair to say that the world completely changed in the fallout from COVID-19. People were forced to reevaluate their everyday activities. From travel, to work, and even purchasing the most basic of products.
Online shopping exploded at the beginning of the pandemic. Despite the recent decline in virus transmission, many people still remain hesitant to return to brick and mortar shopping. Online ordering is how many people prioritize their buying behaviors these days. However, this massive shift in consumer purchasing behavior has overburdened the supply chain. For this reason, ecommerce sellers are turning to order fulfillment companies to deliver quality experiences to their customers.
Supply Was Low at the Height of the Pandemic
When COVID-19 forced most of the world into a global lockdown, the supply chain dried up for many businesses. International shipments from product manufacturers to distributors all but ceased to exist at the height of the pandemic, leaving companies with little supply to match growing demand as the first wave of COVID-19 subsided.
According to economist Willy C. Shih, the trade war between the US and China added more restrictions to the global supply chain. Shih argues that companies must permanently alter their approach to supply chain management in a post-pandemic world.
“As a consequence of all this, manufacturers worldwide are going to be under greater political and competitive pressures to increase their domestic production, grow employment in their home countries, reduce or even eliminate their dependence on sources that are perceived as risky, and rethink their use of lean manufacturing strategies that involve minimizing the amount of inventory held in their global supply chains.”
Shipments are Struggling to Reach Their Destinations
Shih isn’t far off the mark in his assessment. According to The Guardian, a record number of container ships are stuck outside the ports of Los Angeles. Why is there such a logjam on the west coast? The answer is another flaw in the supply chain management structure. There aren’t enough trucks or truck drivers to unload and deliver the products onboard.
The ports of Los Angeles and Long Beach are responsible for 40% of all container imports in the United States. It’s the largest percentage in the entire nation. Conversely, the ports handle 30% of all exports, especially to markets in East Asia. But the effects of COVID-19 have diminished the port authority’s ability to manage such high volumes of cargo.
Consumer Demand is Just Too High
US consumer spending was flat in 2020. With people confined to their homes and unsure of their safety, there was little demand to go out and shop. But in 2021, consumer spending roared back as people reemerged from forced confinement in their homes.
Ecommerce transactions were among the biggest industries to report massive spikes in purchases. According to McKinsey, ecommerce business has shown over 40% growth in the last 12 months, while brick and mortar spending has remained consistent with pre-pandemic market expectations.
Shipping Lines are Increasing Port Shipments
Major shipping companies are working tirelessly to keep up with soaring demand. Mediterranean Shipping Company (MSC), the world’s second largest shipping line, announced an increase in cargo ships arriving in Portland. Why? To help improve supply chain management both in and out of the port.
Each MSC cargo ship contains approximately 650 containers onboard. Additional ships means more shipping containers can be loaded and unloaded at Portland’s Terminal 6, which has been used by companies to try and break the logjam on the global supply chain. Despite the increase in shipments, port authorities anticipate a lower than normal amount of shipping containers to last through the end of the year.
Shortage of Workers
Whether it’s Los Angeles, Portland, or any city in between, the west coast is in the midst of a supply chain crisis. Supply chain logistics experts blame the pandemic, which contributed to such massive demand for e-commerce transactions, as well as restrictive trade practices that are no longer practical in a post-pandemic world.
All of it amounts to a massive disruption in the traditional supply chain management system and a shortage of workers to handle the record high demand. Layoffs at the beginning of the pandemic were followed by long periods of economic uncertainty. People who work in the trucking industry were forced out of a job, and they sought other work to pay the bills throughout the pandemic.
Now, as inventory has reached new heights, there aren’t enough people to help move products from the ports to distribution centers. As a result, deliveries are not being made on time and consumer expectations have dwindled.
Will the Supply Chain Ever Go Back to Normal?
Like much of life in the post-pandemic world, the new “normal” is still being discovered. Economists say that the supply chain must adapt to support business growth in the post-pandemic environment.
But adapting your supply chain strategy is also in the best interests of your consumers. Customer expectations, and your ability as a business to deliver on those expectations are what encourage people to come back to your website and order more products.
With the supply chain in such disarray, customer service is more important than ever for sustainable business growth. Companies must be fully transparent about shipments and deliveries. The average person isn’t aware of of the impact of the supply chain. Educate them with clear and concise updates on your website.
Also, think about how partnering up with a 3PL provider can help address some of the gaps in your company’s own supply chain. 3PLs can help streamline international shipments, process returns at lower costs, and even provide virtual assistance or live support for the most pressing customer concerns. Simply add the services you need to help scale your business and provide fast, simple order fulfillment to give your customers the experience they deserve.
Ready to improve your own supply chain management and provide exceptional customer support? Then get in touch with us at sales (at) owd (dot) com to get the process underway!each