Tugging on the Supply Chain – What Can de Small Man/Woman Do?

Author: Shurland James Jr. 

Supply Chain

Christmas time is here. 🎄 Among all the parang and ponche de crème and COVID-19 news conferences, one conversation point is liming right below the surface: These Supply Chain Issues Real Jacking Up Prices!

Supply Chain and Its Current Issues Explained
As many may know, the supply chain refers to the process that enables the production of a commodity and its distribution to customers. Most supply chains include the sourcing of raw materials, manufacture, and wholesale and retail distribution.

The list of products made in China is virtually endless, making it the world’s number one manufacturer, with the United States a distant second.  The pandemic increased the demand for manufactured goods. As a result, there were backlogs at individual ports from the initial surge in shipping from China. These combined factors increased freight prices. After the March 2021 Suez Canal Obstruction, freight prices surged even further, and have tripled or quadrupled (or even more!) in some cases.

But what that have to do with the price of…
Well, everything really. These distribution problems have increased retail prices which are unlikely to return to 2019 levels anytime soon. 😨

What’s a small business owner to do?
Large enterprises have the resources to take relatively extreme measures like chartering their own cargo ships or ordering the same raw materials from multiple factories to ‘hedge’ their supply.  For ‘de small man’ or ‘small woman’ (as we say in the region), this situation may seem near impossible to deal with.

Here are a couple of things smaller businesses can do:

  1. Consider different sources and shipping options. Though China has been the cheapest source of manufactured goods, given the current situation, even if the products themselves are more expensive, the total cost of goods plus freight may be cheaper from a nearby supplier. For example, the cost of rice in both Brazil and China is almost the same.  Yet using global liner Hapag-Lloyd, the cost of shipping a container from Brazil to Trinidad and Tobago would be half as much as from China to Trinidad and Tobago (7,726 USD vs 12,247 USD).  
  2. Plan ahead. Plan far, far ahead. It may be too late to do that for the Christmas season, but what about Valentine’s Day? Or Mother’s Day? Or Independence Day which, for most Caribbean nations, is 5 – 9 months away?   Planning now for how you will option products or raw materials makes it possible to shop around more, liaise with new suppliers, and save money in the process. 🏃‍♀️ 

It’s estimated that it may be 2023 before freight prices return to pre-pandemic levels.  If your business can wait out the storm and manage to mitigate losses or even turn a profit during this time by using one of these options, surviving long enough to come out on the other side would be a huge win.

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