Even as the holiday shipping rush comes to an end, most North America ports, particularly on the West Coast, are still reporting long delays related to the unloading of cargo ships. Vessels are frequently spending several days anchored just off the coast, awaiting a berthing spot. At the same time, warehouses near the ports, which handle the goods as they come off the vessels, are filled to capacity as supply chains are overloaded with product.
Inbound ocean shipping rates are at record high levels, partly due to a deficit of goods (i.e. revenue) to fill up the vessels returning to the Far East. Ocean carriers are beginning to add more buffer time into their schedules to mitigate the impacts of this chronic global port congestion. Instead of sending “blank” vessels back to Asia, the carriers are now looking at “schedule sliding,” holding the vessels in North America for longer than normal, in an attempt to fill them up more prior to departure. This results in challenging operational conditions in Asia, since the delayed return of the vessels (and fewer empty containers) limits the capacity to ship new exports to North America.
Adding extra time to schedules allows carriers to cope with the delays, minimizing port cancellations and disruptions caused by the second wave of the pandemic and volume surge – hence providing a more reliable (albeit longer) service. As a result, total shipping transit times will be extended.
Our analysis suggests that the demand spike will continue at least until Chinese New Year, and could possibly extend as far out as Easter.
Having a strong partner in charge of your electronics supply chain is even more vital in these times. Avnan has several tools at its discretion to mitigate the effects of these increasing costs and lead times. Component and finished goods stocking plans, consignment agreements, and targeted logistics solutions are all examples of ways that Avnan insulates our customers from risk and delays.
Don’t hesitate to reach out to us to see how we can help to stabilize your supply chain, allowing you to focus on your core business.