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The pandemic has caused a host of problems for the worldwide economy. In the U.S., while many businesses have reopened and some industries are seeing their revenue improve, the supply chain remains in crisis. Therefore, the promotional products industry needs to look for alternate solutions and plan accordingly.
For promotional products companies, the demand for their products have increased, but the supply has decreased. Labor shortages and increase in the price of raw materials are two major causes. For example, cotton prices have jumped up 35% this year; as a result, clothing prices have increased.
Another factor is port congestion, where there is a supply of certain overseas products, but not the manpower or infrastructure to unload them. Before the pandemic, a single ship may sometimes wait to dock in LA, now an average of 40 ships are anchored offshore until they dock. The average ship transit time from China to LA used to be 14-17 days; the current average is 30-35 days. Shipping delays also mean longer times for warehouses to restock their inventories. The number of shipping and ocean cargo containers being sent will rise to a predicted 25.9 containers this year, up from 22 million in 2020. This increase means limited spaces on ships and trains.
The USPS just recently announced the standard delivery time for first-class mail will rise from three days to five. The areas hit hardest by this delay include the western states and rural areas. Fed Ex and UPS also raised their rates this year.
Industry experts suggest companies find alternate suppliers than China and to diversify their supply chain. For example, some businesses are already using apparel suppliers based in Mexico and South American countries. To avoid another backlog, companies should find multiple suppliers in these countries and the U.S.
Instead of ship and freight delivery, consider using drop shipping. While air services are more expensive, they are more likely to meet deadlines, especially for priority shipments.
Businesses need to expect delays in shipping and plan accordingly. They need to be honest with their clients about when the products will ship and how long the delivery will take. If the client needs an item by a certain date, suggest alternate products that are available to meet the deadline.
While some experts predict the supply chain situation will show some signs of improvement as early as Q2 2022, the overall impact of the crisis may be felt for years. It'll likely take a few years for the supply route from China to the United States to stabilize. In the meantime, promotional products companies should find alternate suppliers and delivery methods to ease any backlogs. If you have any questions about the supply chain or need help with your inventory, our representatives will gladly assist you.