Supply Chain Problems Threaten Christmas Trade | Stories of lead
While the global supply chain has yet to recover from the shocks of COVID-19, it could be a bleak Christmas for buyers across the island as traders pass on the rising costs of sourcing goods. abroad.
Freight rates have soared to 600% as some shipping companies, logistics providers and ports struggle to cope with increased demand for supply, complicated by the outbreaks of COVID-19 in parts of the Asian continent, leading some companies to reduce their sales forecasts, as delivery delays take their toll.
“We just got a container last week and it was like a moving target. We should have had it over three weeks ago, ”said Anthony Pearson, general manager of Lloyd’s department store based in Montego Bay. The Sunday Gleaner Last week. “As it is, a lot of people will not be receiving their products for Christmas, even if they were ordered a long time ago. That’s all I can tell you.
Lloyd’s operates from two locations in City 2 and is a leading player in the local retail market, sourcing merchandise from Panama and the United States to satisfy its customers, but Pearson – who succeeded its late father, Lloyd, head of the 55-year-old company – still feels the ripple effects of challenges halfway around the world.
“I don’t do business directly with China, but it all comes from there, so even our suppliers in the United States and Panama depend on their supplies from the Far East,” he explained. “If they don’t get it, we can’t get it.”
The businessman explained that shipping larger goods with a lower value would not make much economic sense, with prices increasing by 10-20%.
“What you are going to find is that the increase in low cost bulky goods such as plastic items and toys is going to be even greater as there will be cases where the value of the goods in the container will be lower. at what they cost to ship it, ”he said.
This challenge also presents another risk for retailers, as consumers could end up spending less during the generally busy shopping season if there is not enough inventory and if they are not attracted to the products on offer, because rising costs are forcing manufacturers to prioritize what to ship.
Businessman Sunil ‘Danny’ Vangani hopes the government will consider a suspension of transportation costs until the situation normalizes.
“What I find difficult is that the freight costs and the prices of raw materials have increased. We used to pay US $ 3,000 [per container]. Now we are paying US $ 18,000 and we have found that getting goods at the price we were previously selling is a challenge, ”Vangani said last week.
Supplier of souvenir items for hotels, bond shops and craft vendors for the tourist market, as well as electrical appliances and furniture, Vangani has operated several businesses along the north coast for over 25 years. . Its shipments originate mainly from China, Thailand, India and Indonesia, with ships traveling directly to Jamaica or via Panama.
“I would ask Jamaican Customs to consider suspending freight charges for this period as you may see an increase soon,” he said. “Getting deliveries on time has also become a problem. “
Other issues from the pre-COVID-19 era also continue to plague the Montego Bay area, including a lack of warehouse space, which has resulted in an unreasonably longer wait for cargo, according to a broker. veteran customs.
“The goods remain on the wharf for two, three weeks without being stripped because Montego Bay has grown too big for the space we have,” said the broker, who requested anonymity. “Right now, port handlers have around 50 containers from around the first week of November that have yet to be emptied because the warehouse is full. “
An increase in online shopping since the pandemic has exacerbated the space conundrum, with U.S. e-commerce accounting for nearly 20% of sales for 2020.
“We’re now down to about 30 containers that have yet to be dismantled,” Port Manager Shane Cochrane of Port Handlers Limited confirmed last week. “But we are working diligently to secure additional space to facilitate greater throughput.”
The problem, Cochrane said, is that customers do not collect their cargo on time, adding that the string of days of immobility in response to the increased rate of COVID-19 infection in recent months has also contributed to the backlog.
“Part of the tradition, historically, is that people send their goods, but collect them closer to Christmas,” he said. “So we have a large volume of goods that are not cleared through customs,” he said, calling on customers to collect their goods, noting extended opening hours to now include Saturdays.