New Covid outbreaks in China are impacting product production. Container shortages are impacting shipping. A shortage of capacity on ships is impacting shipping. Port capacity challenges are impacting shipping.
All in all, many suppliers sourcing from China are confronting significant delays. Unfortunately, not all suppliers impacted are being as transparent as they could be.
The Nine Media papers covered this in a story published online yesterday:
‘String of disasters’: China’s shipping delays set to widen trade chaos
The global shipping industry, already exhausted by pandemic shocks that are adding to inflation pressures and delivery delays, faces the biggest test of its stamina yet.When one of China’s busiest ports announced it wouldn’t accept new export containers in late-May because of a Covid-19 outbreak, it was supposed to be up and running again in a few days. But as the partial shutdown drags on, it’s further snarling trade routes and lifting record freight prices even higher.
Yantian Port now says it will be back to normal by the end of June, but just as it took several weeks for ship schedules and supply chains to recover from the vessel blocking the Suez Canal in March, it may take months for the cargo backlog in southern China to clear while the fallout ripples to ports worldwide.
The port problems are expected to continue for another 6 to 8 weeks, which could play into Christmas plans.
GNS most recently wrote about Chins sourced supply yesterday:
Increasing congestion across shipping ports in southern China is worsening due to a recent outbreak of COVID-19 cases. The Guangdong province, which is a key manufacturing and exporting hub in southern China, is experiencing its biggest backlog since at least 2019. As a result, we are facing ongoing challenges from our overall supplier base with stock availability due to Global manufacturing constraints, continued freighting challenges and pressures on raw material availability. We are seeing an increase in the length of supplier lead times of up to six months in some cases.
Rest assured, GNS is working closely with our suppliers to improve forecasts and stock availability. Our suppliers in some instances are airfreighting stock where they can to help ease the pressure, however we will still continue to have ongoing out of stocks impacting immediate stock availability.
If you require any updates please do not hesitate to contact your GNS Sales representative or your local GNS Customer Service team.
Good for them for being transparent.
GNS is not alone in experiencing an impact.
If you are a supplier and have been impacted or expect to be impacted, please let retailers know now.
I am noticing similar stock issues in inks and toners. It is now a factor when ordering for orders and/or shop stock. Seeing their stock levels when ordering from a supplier drives this home.
I agree Peter. This is a significant issue, which will benefit those suppliers who are sourcing locally.
The suppliers who know they will be or are likely to be impacted need to advise their retailer customers immediately, so contingency plans can be put in place.
Trouble is with sourcing locally is we as a society/country have out sourced our manufacturing overseas. On the whole to Asia. This means we are now dependent on a shipping system that was designed around Just In Time principals. Covid disruptions shutdowns and the recent Suez crisis has caused large effects on shipping that was entirely predictable. Further though when one looks at the costs of shipping boats and ports with associated distribution infrastructure systems you can why Just In Time principals are so attractive as as they minimise the cots of very large Capital Investment.
Local can not provide the product a lot of us sell other the printed media and gambling services.
It’s been interesting to see some of the greeting card companies move from 5% to 10% locally printed to 90% locally printed in the last year.
Smart leaders at the state and federal level would have seen the opportunity early last year and guided investment in establishing manufacturing for products that cannot be produced here because we have let that tech go.
Yes I agree with that.
Just as another thought instead pouring huge amounts of Capital into housing where we have created a huge financial bubble which will inevitably burst. What if instead we had put some of the Capital into modern efficient productive manufacturing systems and made this Capital work for us we would now be a lot better insulated from these shipping and supply issues we are seeing.
Looks like a great theory, problem is we have lived off exports such as the sheeps back, mining iron ore, coal etc to have such great wages and lifestyle. then agreements with our trade partners for exchange of goods offset by cheaper labour and then there was the change in immigration from England (heritage) and Europe, to Asia and the Sub Continent.
Hence we are where we are. The flight of capital into Assets (housing in [articular has nothing to do with this problem. Yes we can do it however it would promote a wages explosion as well as an import balance of payment problem with a very touchy current trading partner -China.
Aussie manufacturing ain’t gonna happen. Target white t-shirts made in India from Australian Grown Cotton highlights the size of the labour cost issue. Cheaper to export raw materials and reimport finished product than pay highest basic wage in world, leave for annual, LSL, sick (entitlement) maternity etc etc, superannuation.. the list goes on.
Prawns exported and imported dressed another perfect example.
All we can deal with are the facts and the facts are that there are more newsagency suppliers sourcing locally produced product today than in June 2020 and than in June 2019.
Again, what some of the card companies have achieved in re-engaging with Australian printers is proving to be a good move on many fronts.
colin,
I believe we’re saying the same thing and in saying that there is Mark’s statement of facts that the suppliers are sourcing product from locals as a “matter of necesssity” (my parenthesis) which may or may not develop post COVID as we know it now. However it will find the level of competency of price competition (as it always does in open markets) conducive to the wages levels we enjoy today.
Australian manufacturing in filling a hole has a stop gap feel to it however some may survive and prosper however most will I believe, revert.