A Problem for the World
“Global Supply Chain.” A year-and-a-half ago, few people had ever heard those three words, but now it has become a shorthand for the side effects of the Covid-19 pandemic as ubiquitous as your morning cup of coffee—that you can no longer get because, well, “global supply chain.” But, what exactly does “global supply chain” mean and how does it affect you?
What is the Global Supply Chain?
Behind nearly every item in your house there is an invisible chain of manufacturing, transportation and logistics that can be traced across the world. That TV you bought at the electronics store? China, with parts from Taiwan and South Korea. That sofa from the furniture store? Poland, with parts from Vietnam and Malaysia. The dining room table you bought hand-made from a local artisan? It’s possible that even the wood they bought at the hardware store came from an international tree.
In the modern economy, we have created an interconnected web that links every citizen of every country. Historically, the actions of a man living in Mexico would have no more effect on a woman living in Russia than a butterfly in a hurricane, but with the advent of digital communications and the exports/imports business larger than ever, everyone is connected. A delay in the Suez Canal sends ripples throughout the oceans and can increase shipping times from 60 to over 130 days, on average.
Why is the Packaging Industry Affected?
In short, the packaging industry is affected, because every industry is affected. Unfortunately, the packaging industry, through sourcing materials to delivering final products, bares the brunt of the delays.
Some of these global supply chain delays originate from massive ports, like those in Ningbo, China, being shut down due to outbreaks of Covid-19. Shuttering these locations, for even one day, leads to dozens of container ships having to anchor off shore and wait for space to become free at the port.
Another issue is a lack of shipping containers. This is a tricky logistics problem to work around, because there is not a shortage of the total number of shipping containers, but rather a lack of containers in places that require them. Early during the pandemic, containers had been sent with medical and other supplies to south Asia and Africa. As shipping costs grew and grew, there was an inability to cost-efficiently move them to ports in Europe and America where they were desperately wanted.
These problems create significantly longer lead times for every product to come to market. While it is not ideal, many non-expiring products can wait. It may cut into current profits, but eventually those products will hit stores and be sold. However, in some worst-case scenarios, the coding on the packaging creates an artificial sell-by date. Catch Co. is a fishing supply company that anticipated big numbers from their “12 Days of Fishmas” advent calendar. After being stalled at the Port of Long Beach in California, there is a small chance the calendars, stamped with “2021” across the front, will make it to store shelves before December 1. Catch Co. will have to eat the cost of any calendars not sold this year.
How Do We Fix the Issues?
The global supply chain issues will not be solved overnight; it will take time and effort from every country to return the global economy to its pre-pandemic strength. Here in America, President Biden is attempting to alleviate the blockages in the California ports of Long Beach, Los Angeles and Oakland by switching to a 24-hour schedule. The hope is working around the clock will move the containers currently in the port and make space for the ships waiting to unload their cargo. Unfortunately, this plan requires truck drivers to be driving through the night and the number of truck drivers is not high enough to meet this demand. An infusion of workers through increased incentives is just one idea being floated by unions to employers.
During the recent G-20 summit, Biden encouraged world leaders to enact similar measures in their countries. There is a massive amount of scrutiny on these global issues, but no immediate solutions. With every delay compounding on the other, it will only be through slowly whittling down the backlog that the current global supply chain crisis will be solved; experts forecast a return to normal no sooner than Q2 of 2022.
GCB Solutions has the experience and the resources to help you through the current supply chain crisis. Whether you are just beginning the design process or looking to make that final push to launch, we can help.
Call us at (904) 263-2804 or schedule a free consultation, today!