Preparing for Potential Disruptions in the Supply Chain

For many years, companies were lulled into thinking that international shipping functions smoothly and kept minimal “just-in-time” inventories with strict turns. The result of recent world economic events is changing how businesses control their inventories in favor of hedging against potential disruptions in the supply chain.

The Suez Canal was blocked for six days at the end of March 2021 after the Ever Given, a ship the length of four football fields, ran aground and held up more than 400 vessels at one of the world’s most important trade arteries connecting Europe and Asia. It took about a week for the queue of ships to pass through the canal following the reopening.

The result of the six-day holdup in shipping vessels is that container terminals are stretched for space to store the boxes coming off the ships, particularly at larger ports in Europe and Asia. Shipping lines have asked customers to send only urgent goods and are dropping off cargo at one port to be sent to another. Optimistically, the best bet is that we will see a normalization in Europe around the end of the year's second quarter because of Suez, and the US will see a normalization around the end of the year's third quarter.

Meanwhile, supply chains worldwide have been significantly disrupted, and only the manufacturers who built an emergency supply chain plan into their purchasing formula will weather this storm without incurring significant losses. Given the recent disruptions in the supply chain affecting the world, manufacturers are opting for sourcing locally whenever possible, a percentage of their basic manufacturing needs and/or storing locally at public warehouses a minimum percentage of the overflow of either finished goods and/or raw materials.

Let PC CARGO help you find ways to BUILD YOUR INVENTORY and AVOID THE PENALTIES of a supply chain disruption today!