What’s Disrupting the Supply Chain and What Can Manufacturers Do About It?

At any given moment, there are around 50,000 merchant ships crossing the oceans, carrying as many as 5-6 million containers of cargo. Freight is a huge business whose efficiency impacts the rest of the supply chain and nearly every other facet of the world economy. 

Shipping a container through major U.S. ports is currently taking triple the time it normally does. 

And the impacts of those delays are being felt in all of our pocketbooks. The average price worldwide to ship a 40-foot container has more than quadrupled from 2020, to $8,399. This increase in shipping costs is expected to drive up prices for consumer products as much as 10 percent.  

So, what’s causing the disruption and what can manufacturers do to help offset delays and price increases for their customers? 

Major Fluctuations in Consumer Demand

The pandemic caused major shifts in consumer demand patterns. Within a matter of weeks, the entire global population changed the way they lived, worked, and shopped. Manufacturers pivoted operations in an effort to follow demand, but consumer desires remained difficult to predict.

For example, the demand for cars crashed while demand for laptops and gaming consoles soared. This shift contributed to the semiconductor-chip shortage. Modern cars can contain as many as 3,000 chips. But as car sales plummeted in 2020, supplies of chips were redirected to manufacturers of smaller electronic goods. When the demand for cars increased again, there weren’t enough chips to go around. Carmakers were forced to stop production lines and many also started hoarding chips when they could get them, making the shortages worse.  

Scenarios like this one played out across countless sectors with countless products. A major challenge of the supply chain issue isn’t just access to a specific product, but oftentimes it’s about access to a single component of a product. 

Lockdowns and Border Closures

The pandemic also created unprecedented travel bans, border restrictions and even border closures. 

The complete closure of certain ports caused major upheaval to the tens of thousands of merchant ships managing their daily routes. 

Delays and backups in the tightly orchestrated production that is shipping create a domino effect that can take months to recover from. Considering the pandemic triggered countries to institute multiple border closures and import restrictions throughout 2020, it’s no surprise that the shipping industry is still feeling the after effects of these disruptions.

Labor Shortages

Labor shortages at all points in the supply chain are also causing disruptions. 

Lockdowns came with waves of layoffs in production, leading to labor shortages when demand picked up. In Vietnam, for example, layoffs saw workers leave industrial hubs and flock to rural areas. That type of labor migration could not be easily reversed, causing ongoing production slowdowns. 

Once products are made, labor shortages still impact the shipping and delivery of those products. Ports may have record numbers of containers waiting to be unloaded, but they’re also lacking appropriate staff to unload and load them. 

President Biden tried to ease supply chain bottlenecks by ordering ports to stay open 24 hours, but the impact of the order has been blunted by ongoing labor shortages.

The supply chain disruption is a problem with many sources. Analysts are predicting issues to persist well into 2022, though the completion of the holiday season and Lunar New Year should lessen container traffic congestion.

How UCEC is Combatting Supply Chain Challenges

Challenges with the global supply chain are impacting nearly every business right now. Luckily, we’ve been around for more than half a century so we are resourceful and have long standing relationships with our suppliers.

When parts aren’t just slow to come by, but also increasing in price, we work with our vendors to lock in a client’s volume pricing early. We also broker agreements for our suppliers to keep parts on hand to avoid shipping delays. 

But that’s not our only solution. If supply issues are threatening a delivery deadline, we know what substitutions to recommend or what components can be assembled in the field.

We work as part of our customer’s team to find solutions that avoid downtime for their business while refusing to compromise on the quality of the control panel.