COVID-19 has created havoc around the world; not to mention all the death and illness in its wake. At GDM, we are very fortunate that we have all remained healthy and the pandemic has had no negative effect on sales. Our manufacturing partners have had relatively few production delays although they have seen manufacturing costs and ingredient costs increase substantially. This, of course, has resulted in price increases in early 2021. We are hoping that we can avoid further price increases later this year.
Where we have seen the greatest influence of COVID-19 is on logistics. We see it both domestically and internationally. Prior to the pandemic, it would take a week to ten days to book a container; sometimes less time. Now, Junior is fortunate if she can book a container in less than three weeks. But then she has to hope that a container will actually be available with a truck and a driver.
Americans, like people around the world, have been in some form of lockdown or reduced social activities for a year now. When the going gets tough, Americans go shopping. Online purchases in the US are at record highs and that means more and more imports, especially from China. There are lines of ships outside ports around the world as ships wait for a space to dock. There are also trucking delays as the demand for trucks is so high. Bottlenecks everywhere.
And, of course, we hear the horror stories. Containers sitting at the port for a month or more waiting for space on a ship. Orders sitting in a warehouse for two months waiting for containers. It is now faster to ship to Asia off the US East Coast than to ship by rail to the West Coast. In fact, some of the ships that are leaving from the East Coast for Asia no longer even call on West Coast ports due to the congestion there. Junior has to stay nimble and creative. And we also must give credit to the forwarders she works with for the information they provide and the suggestions they have to get containers shipped.
We are making decisions that we never made in the past. If we have a booking and the order is not complete, ship what is available! If you wait, you may wait another three weeks. Freight rates? Not something we worry too much about now. Whatever the ocean rate is, it is less than air freight. If the rate is competitive (meaning low), that container may not move as the steamship lines have more profitable opportunities and very limited space on their ships.
As I often say, when steamship lines are losing money, no one offers to pay more for freight. By the same token, when steamship lines have the upper hand, they will charge more, and they should. Today, steamship lines have the upper hand, and we need to recognize that and accept it. Things will eventually go back to “normal.” In the meantime, we all need to be flexible, patient, and just a little cleverer than the competition. Afterall, we are all in the same boat.