More Shortages Coming--Attention Shoppers!!

How the United States is impacting the global transportation industry right now

I am a supply chain junkie, I’ll admit it.  Words like Containerization, Kanban, LIFO make me giddy, and my favorite artwork are pictures from the shipyard in Hong Kong. I am giddy when I see containers on US roads that just loaded up from a railyard.  I am continually fascinated by foundations of railway, tracks, and ocean liners built hundreds of years ago that are still utilized today as the foundation for how consumers consume every single day.

As the CEO of a distribution and import company, my team manages more than 40,000 points of distribution to US retailers. This past week our team had an international call with one of our suppliers, Blue Elephant Royal Thai Cuisine. 

 The product ships to over 40 countries, however the team shared how the variances in COVID management by country has impacted the ability to control production and sourcing costs to service a truly global market.  The business in Switzerland is up 40% year to date.  The business in China is down, because major shutdowns closed roads and product can’t move around.  There is no central aggregator of country by country COVID management strategies, forcing global companies to “figure it out” when the costs and risks are very high. 

As if trying to produce for countries with different languages (requiring different packaging per order) and attempting to have it arrive in country before the next shut down occurs isn’t hard enough.  Imagine having to do it with one country taking way more than its fair share of resources necessary to keep the global shipping economy working.

There are no sourcing challenges for raw materials which all come from Thailand.  There is no shortage of labor because the product is made in Thailand, there are no government shutdowns, there are no shortage of orders from countries and consumers worldwide who want the product.  So, what’s the problem this time?

The United States.

Yes, The United States

And…. the Containers to which have been ‘parked’ on some of the most glamorous beaches the US has to offer.

Containers are a fantastic metal structure that knows no race, religion, color, sex, country, or bias. Their sturdiness unites oceans, railways and roadways like nothing else, and it does this globally and without pretense.  The world cannot exist without a container--much like air, water, earth and fire, consumers who purchase things cannot do so without the help of a container.  If I could write a love story (which I can’t because obviously I’m a supply chain geek), I would write about a container and its enduring, unbiased love for all people across the entire world.

I was sent this picture on Tuesday.  

I have one container here!  40 TEU’s to be exact.  This container is ready to fill the shelves at major grocery stores across the United States.  The Rail is ready, the LTL transfer is ready, and my warehouse really wants to cross dock these pallets because the art of the pallet build is really something to admire.  And the container, it really wants to be unloaded and get back on the boat to sail off into the sunset to do its work all over again in other country.  These containers like to beat “Executive Platinum Status” at all costs, making even the wariest road warrior look lame in comparison.

So, what does this mean globally?  Let’s go back to Blue Elephant for the crises currently underway in the 39 other countries.  Europe has the consumer demand, but they can’t get the product because there aren’t any containers.  Australia and New Zealand customer demand is up, but they can’t get the product because there aren’t any containers.  Canada can’t get containers; Africa can’t get the containers.  In fact, the only country that can get the product is Thailand, but surprisingly Thailand isn’t the biggest market for their Thai food, its everywhere else instead.   Worse, is that the warehouses in Thailand are filling up because there aren’t any containers to move the already produced product to.  The United States, well, we do have the containers (and, well--the worlds containers at this point), but they are taking a vacation until state by state guidelines are figured out in the changing times of well, state by state guidelines.

Wait, how many boats are there sitting at one of the world’s best beaches in California along with my 1 container?  40 boats just sitting there.  22,000 TEU capacity each.  880,000 TEU’s?  Ok…. so just 44,000 containers are on a beach vacation this week?  My container holds 18,000 units (and we pallet load instead of floor load so the capacity is lower) …. Based on this math though, about 1 Billion widgets are taking a break at the beach.  And this is just one port from Tuesday.  Let’s not forget about the other ports along the West, East, and Southern United States too. (And dare I say we that if we too had a central communications strategy to manage state by state shutdowns some of these boats could have moved to a different state)

Sorry Switzerland.  Sorry Australia. Sorry Britain.  Sorry India.  The shelves are empty in the US too.

When this is all over, my team deserves their own beach vacation too. Why should the containers have all the fun?!

Shannon Bedore is the CEO of Sightline Retail, a Sales, Distribution and import business, working with big box retailers across the United States.  The company manages imports, customs, inter-modal transportation, and currency fluctuations as a way to help products stay in stock at retailers across the country.  In order for these products to stay in stock, they synchronize the differences between actual consumer behavior versus what the retailer predicts will happen, and optimize the delta working way back into the very first sourcing and production of the widget.