- Business owners are trying to deal with a number of issues shaping the emerging shipping crisis.
The demand for shipping is at an all-time high. Many businesses are looking for ways to save money on shipping and get more reliable shipping services as they scale their distribution channels.
This has led to scenes like those seen at California’s Los Angeles, Long Beach and Oakland ports, where Bloomberg reports a 24% month-on-month rise in average shipping volume has clogged up the entire system. For the myriad of businesses that have turned to ecommerce in order to weather the pandemic storm and, indeed, flourish, the current stop in shipping services – and the increased costs that have come with it – are proving hard to reconcile with business costs. There is, however, light at the end of the tunnel, at least in internal markets.
The use of courier services for local and regional delivery is one solution. One-day and overnight delivery is nothing new, of course. Amazon caused controversy as far back as 2019, according to BuzzFeed, when their premium service disrupted the supply chain. What has changed when it comes to modern-day overnight shipping and courier services is the breadth and affordability of services. It’s now possible for businesses to secure regular courier services and internal shipping contracts without having to break the bank and, crucially, while still providing a huge amount of value for the customer. While international shipping stalls on the banks of the nation, more agile internal couriers are able to get finished products into homes.
This isn’t, however, where the story stops. While delivery to customers is one part of the puzzle that can be solved by a primary focus on internal and regional delivery, businesses need to look at other areas of their cycle, from production to delivery. There are obvious issues created in logistics and the supply chain by a dearth in shipping.
The supply chain
How, though, can businesses address the supply chain? As CNBC highlights, manufacturers of made-in-America products like furniture are still feeling the sting of the shipping blockage. Not all materials can be sourced reliably within the USA after all, and that’s a big problem for businesses. Increasingly, businesses are turning to land shipping to rectify the issue. Materials can, and should, be sourced from outside of the USA but still within the Americas. Furthermore, the need for self-sufficiency has led many countries within the USAs immediate supply chain to ramp up their own production in order to build their own resilience. For American entrepreneurs, it’s time to look at building those networks to procure primary materials. The disruption provided by technological change can also contribute to a better environment for businesses, their partners, and customers.
Improving the speed and quality of shipping is a key objective of technological change. The use of drones, speedy electric vehicles and more sustainable business practices, like the use of 3D printing in manufacturing, is providing a way for businesses to build their products in-house and get them distributed in a clean and minimally disruptive manner. While there’s no one-size-fits-all approach yet for taking this on board, business owners will do well to look at alternatives to the orthodoxy of delivering products to their customers while maintaining a service. There are options, and technology is rapidly advancing to meet the need. Whether technology can help to provide a real alternative to conventional shipping and play a role in reversing the current macroeconomic trends is another matter, however.
The desperation of businesses to find their shipping and get the job done is perfectly highlighted by the new trend of independent cargo ship chartering. The problem with this is that it directly hits profit levels. As Quartz magazine outlines, retailers are chartering their own, inefficient shipping solutions – 800-container capacity ships which pale in comparison to the 20,000 plus container ships currently being built. This is poor value for money and is creating an inflationary cycle, according to Quartz, which will have an impact on the wider shipping ecosystem. As more ships are bought up, the costs overall are driven up as port space and manpower struggle to cope. This will increase overall shipping costs for businesses across the entire world, and is something to be wary.
That said, the shipping system doesn’t have to be a total block on business growth. Instead, it can be worked around, and with, to help businesses continue their business as usual. A little outside the box thinking will, as in all areas of business, go a long way. American businesses are flourishing through a new reliance on the internal market, which can be a true solution to the current delivery headache.