The record-high 60 vessels stuck outside the ports of Los Angeles/Long Beach waiting to berth has been reduced to about half over the last few weeks, but congestion isn’t likely to clear entirely to at least the spring. That’s bad news for beneficial cargo owners (BCOs) whose cargo is perishable. Imports of fresh produce from Central and South America are among the perishable shipments that are spoiling as it sits on vessels. Even though most perishables are transported via refrigerated (reefer) container, the excessively long delays to discharge containers means that even if the fruits and vegetables don’t spoil, then their shelf life is seriously diminished. Other perishables, such as bulk and bottled wine are sturdier, but time and temperature swings are no friend to vino.
Soft pitch of the day: Check out VinRoutes’ coverage of VinAssure, a blockchain solution launched by eProvenance and IBM in December. The disruption we’re seeing across global supply chains, which frankly is the norm and not the exception, easily makes the case for investing in advanced monitoring and tracking solutions such as VinAssure.
Meanwhile, get accustomed to congestion. The recovering U.S. economy and corresponding strong consumer demand are driving imports. People’s homes are where it’s at these days: they are our workplace, our classroom, our gym, our wanna-be Food Network kitchen, and we’re furnishing and remodeling our homes at a furious pace. Desks, chairs, computer equipment, TVs, furniture and home accessories, exercise equipment and more are flooding into the U.S., mostly from Asia.
In a conversation last week with Dean Croke, principal analyst for DAT iQ, he noted that import volumes of bicycles and parts were up 70 percent y-o-y, while footwear and car tires were both down in the neighborhood of 20 percent y-o-y.
“That sums up the story of Covid’s impact,” he remarked.
A few other trends are worth noting. Manufacturers are moving from a JIT (just in time) inventory model to “just in case,” said Croke. In other words, manufacturers are building up extra inventory to offset the supply chain disruptions that peaked last year. But even buffering inventory levels isn’t enough for manufacturers, as their recent earnings reports reveal.
Boat and RV manufacturers and others from a range of industries can’t get raw materials and parts. Sales are off the charts, yet delivery of the finished goods is being hampered by shortages on the production side.
What does it matter if a manufacturer in the middle of the country can’t get windshields for its water ski boats? Well, if you’re in the wine business: an importer/exporter, retailer, grower, software provider, or logistics provider—you get the picture—it means plenty in today’s world of highly integrated supply chains and the exposure and vulnerability these supply chains have to trade wars, fluctuating exchange rates and economies, climate change, geopolitical developments, shifting consumer behavior, and so much more.
Yep. Lots to ponder. So pour yourself something soulful…we’ll join you virtually and help you navigate this New World of Wine.