SUPPLY CHAIN ISSUES, AND HOW TO GET WHAT YOU WANT FOR THE HOLIDAYS
Supply Chain Issues, And How to Get What You Want for the Holidays
Order Now: UPS International President Scott Price was quoted recently as saying “I half-jokingly tell people ‘Order your Christmas presents now,”as well publicized global supply chain issues are requiring businesses to plan their gifting now to ensure their first choice of options for gifting and to allow time for custom printed cards, gift packaging, kitting, and timely delivery, in many cases to employee and client homes. While there is truth to Mr. Price’s statement, the good news is that in the face of global supply chain challenges, TPS and our supply chain partners are prepared to meet the demand. That said, the reality is that ordering early will may also be difference between getting what you really want vs. getting what is available.
While this article is about significant global supply chain issues at play, our goal is to highlight the challenges as well as the solutions available. Let’s start with the good news: TPS has been working diligently to work with our supply partners to ensure the greatest availability possible of the products our clients need for holiday gifting orders and beyond. Now is the time to get moving on your holiday gifting to take full advantage of existing inventory, creative branding, personalization options, custom gift packaging, kitting and distribution to ensure you deliver a meaningful and engaging gifting experience for your most valued resources: your employees and your customers!
Now is the time to get moving on your holiday gifting to take full advantage of existing inventory, creative branding, personalization options, custom gift packaging, kitting and distribution to ensure you deliver a meaningful and engaging gifting experience for your most valued resources: your employees and your customers!
Why Are The Costs of Many Items Rising?
As the world emerges from the pandemic, the landscape of many industries is entering an unprecedented period of demand for consumer products. A multitude of factors have contributed to a sudden spike in costs in many industries, creating unusual frustrations especially regarding shipping costs and lead times. Here are the supply chain challenges you should be aware of:
1) The Cost of Bringing Goods to North America at All Time High, With Significant Delays:
Lan Nguyen, senior vice-president of operations and information technology at Herschel Supply Company, one of Canada’s favorite brands available from TPS, noted that the current state of the shipping industry is “a global crisis in terms of logistics”, which has resulted in year-over-year shipping cost increase never seen before. Global consulting firm McKinsey & Co points our that shipping costs are up to 6x higher than pre-pandemic rates, with delays in the ability to move goods in a timely manner. Why?
2) Increased Demand + Reduction in Supply => Congestion + Delays => Increased Costs
During the pandemic there has been shift in consumer spending away from services to goods (clothing, furniture, and household equipment), the majority of which are imported, resulting in up to 40% increased demand for ocean cargo space from China to North America, causing significant congestion-related delays, and therefor costs, at shipping ports, container yards, rail and trucking systems. To make matters worse, there has been a significant reduction in supply, initially due to shipping companies reducing capacity during the early stages of the pandemic, then the unexpected blockage in the Suez Canal, and most recently the terribly impactful closure of the Yantian shipping terminal near Shenzhen, China (and others) due to Covid-19 outbreaks, and earlier this week the Chinese government imposed significant restrictions in Xiamen, a hub for production of electronic items and consumer goods. Demand, is at “peak season” highs due to retailers and promotional product suppliers needing inventory to fulfill holiday orders, followed by the critical need to have goods destined for sale in March, April and May to ship in December and January prior to the Chinese New Year holiday where factories and terminals shut down temporarily. Demand for exports from China is expected to remain high until spending on services such as on international leisure travel increases.
Are Vietnam or Other Countries A Viable Alternative to China? Vietnam can be a viable alternative, particularly for apparel, headwear, bags and other “cut-and-sew” textile items. However, there are backlogs in Vietnam too as the majority of the country was shut down with a lockdown including a “shelter-in-place” order from July 9th to September 15th. Other countries have strength in producing other product types (Korean for microfibre items, several EU countries for quality pens, Turkey for towels and stationary items, Bangladesh for casual wear, etc.). Those solutions are part of our existing supply chain solutions and do present some options, although the fact remains that production in China, and therefor shipping from that region, remains heavily relied upon by promotional product suppliers and retailers.
3) Demand for manufacturing in North America is booming, which is great news for domestic jobs, Canadian manufacturers and material suppliers, including many diversity owned Canadian businesses (ask about TPS’s Supplier Diversity Program and our membership in Women Business Enterprises Canada). TPS is thrilled to provide you with options from high quality Canadian manufactures including brands such as Drizzle Honey, Redwood Classics, Kootenay Clothing, and many exceptional Canadian private label manufacturers. However, be aware that the increased demand means longer lead times and somewhat increased costs as we face labour shortages in Canada due to current government subsidies. There have also been shortages of certain supplies in North America, including for paper sheets according to various calendar and journal manufacturers.
4) Rising Commodity Costs: The price of raw materials has also been spiking as of late. The most significant cost increases have been noted for such goods as plastic, cold-rolled steel, and polyester fabric. There has also been considerable cost increase in technological products, given the global shortage in semiconductor chips. The good news is that most signs seem to indicate that while commodity prices are currently enjoying a bull market, TD Bank predicts that because the conditions that have contributed to the booming cost of commodities are mostly temporary, prices should begin to normalize next year. This outlook allows for planning of future-term cost stabilization, as well as for the foreseeable future as global pandemic restrictions lift.
In short, the shipping industry and the price of commodities have been going just as crazy as everything else in recent memory. The industry and the world at large are meeting an unprecedented challenge, and thanks to all of our efforts, are very gradually passing it by. Greener pastures are ahead, just a short way down the mountain.
TPS is prepared, and working with clients now to provide the best options, minimize supply chain disruptions, and provide meaningful and impactful giftings experiences with creative promotional products, innovative branding, custom packaging, kitting and distribution solutions for our clients. Reach out to your TPS Account Manager today to discuss options.
Looking Ahead: How can you prepare for your promotional product needs?
The old axiom is truer now than ever: the best time to act was yesterday, and the second-best time to plan is now: Your TPS Account Manager is well equipped and eager to work with you to help plan for your upcoming projects, events, and promotional opportunities, for the holidays and for all your 2022 gifting needs.