Written by CMG News Contributor, Doug Carleton
The Mamas & the Papas probably never dreamed that the song that has generally been considered their greatest – “California Dreaming,” would be selected as the theme song of the congestion at the California ports of Los Angeles and Long Beach. As of last week, approximately 70 container ships loaded with cargo were waiting off the coast to get to the docks to unload their cargo. Many of these ships were anchored in the anchorages offshore, but others were just floating around outside the anchorages (which were full), dreaming of when they would move up in position. At the ports themselves, the operators are dreaming of the times when there were enough trucks, truck drivers, trains – with crews, and warehouse space to house all the containers that are getting stacked into higher and higher container mountains. Containers that used to take about 40 days to arrive now take an average of 80 days.
Moving eastward, all of the delays moving products to their final destinations mean lost sales at a time when sometimes substantial sales and profits during the holiday season can make or break a year. And while those sales are lost or postponed, the costs of running the businesses don’t stop leading to lower profits. One example of the situation, even though on a giant scale, is that Costco is starting to place limits on certain items like toilet paper (surprise!), paper towels, water (????), and certain cleaning items. And coming back down to our small business level, maybe some owners are beginning to have bad dreams of “Here we go again, and at the absolute worst time of the year.” Are any of your products floating around there somewhere? Or waiting in a railroad yard somewhere? If they are, are you able to get any pricing help from your vendors? Could the dramatic increase in freight costs kill a formerly low-margin product? Are any of your vendors possibly selling products that they normally sell to you now selling instead direct to consumers at lower prices than you would be comfortable with? Looking at all these factors, in a worst-case scenario, could another popular song – “Jingle Bells” become “Jingle Bell” because of all the disruptions and cost increases in your supply chain?