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Have you ever hailed a cab or called an Uber during rush hour in the rain? Demand skyrockets and therefore so do ride prices. You have to wait longer for the driver to arrive, the majority of your ride consists of sitting in stand-still traffic, and by the time you do arrive at your destination you are very late.
Supply chains seem to be experiencing the same inconveniences as those associated with calling an Uber during rush hour in the pouring rain. In this case, supply chain ports are overly congested, order delays are mounting, and working capital is getting tied up in transit leaving supply chains stretched and vulnerable.
Worldwide demand is tying up vessel capacity which has resulted in a container shortage sending shipping costs to historically new heights. According to the Financial Times, the price of a 40-foot container routed from Asia to Northern Europe has risen from $2,000 to $9,000, while CNBC has reported that the cost of goods transported from Asia to the West Coast of America has increased by 145 percent.
The entanglement of shipping ports, transport companies, and container vessels plus the reappearance of COVID-19 in the Delta variant all have negative implications for this year’s holiday season. It is likely that product selection will include less options and be more costly than consumers have seen in years past. `
Port congestion invites new supply chain bottlenecks and forces retailers to anticipate new challenges while attempting to restock inventory for the big holiday season. This Christmas will demand a savvy shopper to order much earlier and to also have several gift back up plans in case their number one choice is no longer on the shelf.
Shipping bottlenecks are putting retailers in particular in a tough position financially with two options: they must either pay the outrageous freight costs or face inevitable delays on their shipped goods; however, higher fees do not guarantee on time goods. Supply chain finance solutions can help retailers and supply chains alike to prevent cash from getting tied up in transit. A revolving credit line puts companies in a position to pay their suppliers on time, maintain positive, resilient relations, and combat order delays that threaten their supply and customer experiences.
For more information about supply chain finance solutions and how it can help you untie tied up liquidity in the supply chain, please visit www.traderiverfinance.come or contact us at info@traderiverfinance.com!