Rising driver wages and customs congestion affect comic book distribution
Sea freight: The ocean freight market continues to be plagued by severe port congestion, space availability, reduced port capacity due to COVID-related illnesses, as well as container shortages and high shipping rates. Global port congestion worsened as ripple effects of the closure of Ningbo and Yantian ports due to Covid-19 cases spill over into the global supply chain. Almost all ports in the United States experience heavy congestion. Delayed ships from Asia are further prolonging ship unloadings. Rail operators continue to reduce the capacity to move containers from the port to inland destinations as inland destinations are obstructed by containers as the capacity of chassis and trucks remains limited overall. The most severe shortages are currently seen in the Midwest and Southeast regions. This high market volatility is expected to last through the remainder of the year and into the second quarter of 2022. Shipping rates continue to rise as shippers desperately need available space, fueling fierce competition on the market. the costs. Steamship lines continue to ship the minimum amount of contract and base freight possible, leaving as many slots as possible to sell in the spot market, so “premium” rates continue to rise.
US Domestic Freight: Many drivers who left the industry at the start of the pandemic have not yet returned. Low enrollment in driving schools due to COVID protocols and some 85,000 operators whose drug tests have failed (according to data from the Drug & Alcohol Clearinghouse) are just a few of the hurdles fleets face . As a result, carriers have to raise drivers’ wages to keep them, and we see those wage increases reflected in their contract and spot prices.. A Commerce Department advisory group urges federal officials to lead a widespread effort to address the nation’s shortage of truck drivers, which the panel said has “likely reached an all-time high.” The American Trucking Associations have estimated that the industry is short of at least 60,000 drivers. The outlook for demand remains extremely strong. There have been record freight volumes for months, and there is no immediate end in sight. There is already a large amount of freight in the United States, in warehouses or rail yards waiting to be moved to its destination. Union Pacific is estimated to have 25 train miles and BNSF has 22 train miles, all located outside of the Joliet, IL rail facility. It will take time to get over all of these backlogs, especially with the current peak retail season. Capacity remains very limited and prices continue to rise. Additionally, August through November is the typical peak season for Christmas / Holiday freight, further straining the supply chain. Meanwhile, expect carriers to apply their High Season Supplements (“PSS”) pushing prices up further. Pre-planning is essential to ensure capacity and competitive prices. Please contact TradeRunner for assistance in planning critical shipments.
Branded merchandise: Sea freight is the biggest problem for branded goods from overseas. A large majority of the items we buy in this expense category are from factories in Asia due to the high quality and competitive prices. However, due to the volatility of sea freight capacity and prices, we are seeing a 40-50% price increase due to limited container availability and corresponding higher shipping rates. We are also experiencing longer transit times due to reduced capacity and port congestion. Other factors affect branded items from Asia. The value of the US dollar against the Chinese yuan has also declined, falling about 7.5% from a year ago, pushing prices further up 5-10%. Rising raw material costs – including cotton, steel, gas and oil (affecting polyester and plastic), polyethylene, polypropylene and other chemical compounds – are also fueling these price increases. The closure of the Meidong Container Terminal at Ningbo-Zhoushan Port in Zhejiang Province due to COVID-19 issues is causing a backlog of ships at the port. From this closure, reports indicate that increased congestion is occurring in nearby ports, including the port of Shanghai, due to the hijacking of ships. Inventory shortages are yet another headwind in the branded merchandise space. Earlier this year, a few suppliers faced supply chain issues that caused their inventories to drop to levels significantly below historical levels. While demand in almost all product categories has remained strong and stocks of some of our suppliers have remained stable over the past few months, they have not been able to increase inventory levels as much as they would have liked it. As COVID-19 infection rates continue to evolve around the world, production has been impacted in different countries at different times. Today, the closures in Vietnam and Indonesia are of particular concern, and some of our suppliers are also facing a yarn shortage as many US yarn suppliers are not operating at full capacity due to a shortage of manpower. -work. With the pricing challenges outlined above, be sure to look at full delivery costs when sourcing products, including delivery schedules.
What can we do? The best path through these unprecedented supply chain challenges for paper, substrates, ocean freight, and branded products is Communication supply chain issues, Planning well the requirements in advance, to committo projectsearly and stay flexible.
Cargo: While it will be impossible not to be affected by market issues (be it congestion, lack of space, or high shipping rates), there are a few options to reduce the potential impacts on retail chains. ‘supply. As with papers / substrates, plan ahead . . . and as soon as possible. By providing visibility into scheduled shipments in 4-6 weeks, this allows us to pre-book a space and secure it when it becomes available. Faced with a tight turnaround time, we will identify critical quantities that can be shipped by air freight, while preparing for sticker price shock, as air freight also has limited space as demand is high. still high due to the disruption of traditional routes. Anticipate and prepare for additional charges and potentially dramatic rate increases – this could range from original trucking charges, ocean freight bonuses and / or additional nationwide costs for wait time or the chassis.
Branded merchandise: To help alleviate some of the challenges currently facing branded product sourcing in Asia, our strategic sourcing is looking at other countries where ocean freight may be less expensive, such as EMEA or LATAM. are slightly less crowded than the West Coast, potentially reducing delays. We are looking to source branded merchandise from Mexico, where the products could be shipped by truck. In addition, we are making contingency plans so that other countries are flexible if disruptions start to cause production problems. As is the case with paper, substrates and ocean freight, plan ahead and Communication is critical. Is there a possibility of increasing order windows from 4 to 6 weeks to help compensate for longer transit times? If you cannot reassemble the order windows, can we secure overseas item pre-commitments based on historical order information for the most critical needs. Is there a possibility of air freight an initial quantity of these critical items, allowing the rest to ship ocean freight? Although more expensive, it would ensure that the order is delivered on time.
Plan early for your vacation needs. Stock orders should be placed as soon as possible to ensure that inventory is available and can be completed on time.
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