Author: Bob Press (TAP Financial Partners)
For most of us, COVID-19 began to impact our personal and professional lives in March 2020. Since that time, a compromised supply chain has impacted businesses in both large and small ways. Here are five challenges we expect to continue to challenge companies:
- Online shopping
While millions of people were already shopping online for groceries, clothes, and furniture before the pandemic, that number skyrocketed when brick-and-mortar stores were forced to close down. A recent survey found that nearly half of consumers say they shop online more frequently now than they did before COVID-19.
While this is great news for eCommerce businesses that are reaching more customers than ever, the sudden shift in consumer behavior is leading to unprecedented shortages and backlogs.
- Scarcity of raw materials
One of the holdups for goods getting where they need to be is a shortage of raw materials, including plastics, semiconductors, crude oil, and chemicals like citric acid. These raw materials are essential for making a lot of the products that are
sold on eCommerce websites. Without them, it’s impossible to make certain things. The lack of raw materials is impacting everything from clothes to bikes, food, and furniture.
- Labor scarcity
Even if the raw materials are available for your products, you might still have to deal with the labor shortage taking place across the country. For example, FedEx recently revealed that their hub in Portland, Oregon, is operating at 65 percent capacity because of the labor shortage. The result is that thousands of packages are getting rerouted each day, resulting in delays for customers.
- Increased freight prices
On top of everything else, small businesses are finding themselves paying more today than they did for the same shipping a year ago. That’s because freight prices have increased as demand has increased. We’re not talking about incremental increases. Data shows that freight rates from China to the West Coast of the United States have jumped by a whopping 240 percent.
- Congestion at ports
The increase in demand for products means more ships are docking in ports. Additionally, labor shortages and COVID restrictions mean fewer workers are available to meet these ships and unload the freight they carry. The result is an influx of port bottlenecks, where ships are sitting around, waiting for some capacity to open at the port so they can unload. For consumers, this means delayed delivery times.
If your business is struggling because of supply chain issues, let’s talk. We may be able to help you get the capital you need to keep your business operating until some of these challenges are resolved.