How Shortages are Affecting Everyday Life
There probably isn’t a business that hasn’t faced some type of product shortage over the last 18 months. The global economy is playing catch-up as a result of COVID-19 supply chain disruptions, and now, we’re all seeing the effects. So, what exactly is causing the ongoing shortages, and what does it mean for everyday people? It’s a combination of these things: increasing freight rates, cargo container deficits, labor shortages, and port congestion.
Freight Rate Increase
Over the past year, ocean cargo prices have increased by four times, directly affecting the price for transporting a common 40-foot container between the US and Asia. The average cost is currently $20,586.
Cargo Container and Labor Shortages
Another factor in the ongoing supply-demand battle is a shortage of shipping containers, driven in part by labor shortages caused by COVID-19. With less people to deliver and receive containers, some containers are stranded in the ports. Also, the average time it takes an ocean freight to go door-to-door is currently 71.5 days—a 43% increase from this time last year.
The ports in Los Angeles and Long Beach are responsible for nearly half of all US imports and have hit new records for the number of container ships waiting to unload their freight. So far, in 2021, the ports have handled approximately 862,000 imports.
At Gamse, we know that the increased demand for pulp and paper has outpaced the supply, disrupting the label business. But how do these shortages affect everyday life for everyday business owners and consumers?
For starters, being patient will serve us all well. A stabilized marketplace is expected in the future, but right now, one of the biggest downsides to the cargo shortages means the must-have items we’re waiting for will be low in inventory or not available at all for a while. Additionally, prices for those goods will rise, and undoubtedly manufacturers and suppliers will have to pass on the additional costs to everybody else to offset their increased costs.
Gamse is committed to providing our customers with quality products. If you have any questions about how these product shortages might affect your business’s packaging solutions, call us to learn more.