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Our US colleagues highlighted this week the perfect storm of negative headwinds affecting the global shipping industry, creating bottlenecks in supply chains and sending costs soaring towards $20,000 per container in some instances.
As reported in The Financial Times, too, sky-high demand and raw material price rises are piling additional pressure upon retailers as they try to prepare for the upcoming holiday period, which will prove critical in accelerating recovery – or indeed securing survival - post-pandemic.
The debt mountains taken on board to carry UK operators through the worst of the COVID-19 crisis now weigh heavy on balance sheets, and positive performance is essential during one of the busiest times of the year for trade.
With eyes turning toward Christmas, seasonal goods such as fairy lights have been called out as likely to be in short supply, while The Guardian has also reported that the macroeconomic factors at play in Asia could cause a scramble amongst shoppers to secure children’s toys at the earliest opportunity, given likely shortages related to limited shipping container availability and the associated astronomical costs.
Retailers now face difficult decisions regarding paying over-inflated prices to secure supply of the products that will prove a business boon this winter, while any efforts to stockpile will bring storage dilemmas to solve too.
One thing is for certain, the supply chain scenario playing out now will not disappear when the final Christmas lights are turned off (should you secure them) and we move into the New Year.
As with the many business pivots enforced over the past 18 months, retailers will once again need to ensure they are acting fast to flexibly shift their approach to mitigate such disruption – adjusting budgetary forecasts to factor in increased costs, implementing operating models to maintain business efficiency and reconsidering supply chain options where fragilities may have once again risen to the surface.
