Chinese New Year is just around the corner, occurring on February 12, 2021. All of us at E-BI hope the Year of the Ox will bring peace and prosperity to the world. As we are still in the pandemic, here are a few things we would like you to be aware of.
MAKE PLANS FOR YOUR SUPPLY CHAIN WELL IN ADVANCE
Most factories have reached 100% of their production capacity as they face a seasonal surge of orders and backlogs. For houseware type products, current backlogs could last into May of this year.
As predicted, the cold winter weather lit up COVID-19 cases in several cities in China, after about 6 months of relatively low virus transmission. Even though total infections remain in the low two or three digits, government mandated lockdowns in several northern Chinese cities have highly limited the amount of product deliveries possible at once. As governments issue warnings, immigrant factory workers have begun to flee back to their hometowns ahead of their original schedules. To cope with these issues, E-BI’s teams have been developing solutions for the best ways to maneuver through them with little to no impact to our clients’ supply chains.
In preparing for further possible COVID-19 impacts, our teams are also working on getting more inventories built up to prepare for worst case scenarios down the road.
India’s manufacturing capacities are hovering around 55% of normal production due to the pandemic, although some regions have started to relax pandemic related controls. Factories, for the most part, have been able to balance the impact of Covid-19 on their production capacity and continue to offer reasonable levels of throughput.
Vietnam, Thailand and Malaysia manufacturers have all been able to remain near normal levels of production. However, Covid-19 cases continue to pop up sporadically in these regions, and none of these countries are immune to the larger supply chain risk we’ve seen elsewhere in the world. International travel to SE Asia continues to be tightly controlled.
PREPARE FOR HIGHER THAN NORMAL SHIPPING COSTS
Logistics has reached a crisis mode around the world today due to the surge of shipments, port congestions, backlogs, shortage of shipping containers, and low local truck delivery capacities. The December holiday season saw a 17% increase in port cargo at the Port of Los Angeles alone, a staggering increase compared to December of 2019. As a result, shipping times have drastically increased, and prices have risen as much as 4X normal levels. Contract rates may experience an 11% YoY increase and stay at a higher rate than previous years. These pandemic related, cascading chain reactions may last a few months yet before they have been fully digested by the larger logistics ecosystem.
Despite all of these headwinds, E-BI teams are working around the clock to make on time shipments. FOB China timelines are running mostly on schedule. As a reminder, planning well in advance is a prudent step towards minimizing adverse impacts on your supply chain. Please contact your E-BI project manager should you have any questions. We are here to help.