We’re just months away from Christmas and not too long after is Chinese New Year — two significant events that are expected to bring the supply chain to an even slower crawl.
So those looking for relief of any kind from current supply chain headaches in the automotive aftermarket shouldn’t hold their breath, experts said during a roundtable discussion as part of the Automotive Aftermarket Suppliers Association’s Supply Chain Webinar Series.
The supply issue is headed for a bottleneck as we head into Christmas and Chinese New Year, both of which will cause problems for different reasons. While these are traditional time crunches to begin with, the fact that the supply chain is already backed up means these holidays will add more fuel to the fire. With Christmas, demand for consumer goods will be high as people buy presents. Retailers have and will be placing large orders to keep their shelves stocked with items through the holiday rush. With Chinese New Year, the anticipated shutdown of customs will put suppliers in a tough spot to get products overseas.
“The closer we get to Chinese New Year, we all know it’s going to get more complicated,” observed Jay Murphy, supply chain director at MotoRad. “Because [during] Chinese New Year, everybody else is preparing for [disruptions] like we are. It’s going to become a nightmare.”
Chinese New Year starts Feb. 1, 2022. It can be expected that Chinese customs will be shut down around Jan. 24 and not back to full operation until around Feb. 28, according to Peter Pearce, supply chain practice leader at consultancy Baker Tilly. A soft opening for critical government-approved shipments around could start Feb. 21.
Murphy noted that his company started preparing for those disruptions two months ago to get ahead of issues.
“But we’re all doing the same thing,” he said. “We’re all vying for the same product, all vying for the same airspace, cargo space. So we’re all doing what we’re supposed to do.”
That’s already on top of additional delays expected from the demand for products related to Christmas, be it supplies or merchandise. And anyone that hasn’t yet made plans to handle the Dec. 25 rush are well behind the 8-ball, said Jeff Peterson, director of supply chain consulting at Baker Tilly.
“[A company that hasn’t] gotten their orders on the water yet, you’re probably not going to have the goods available for Christmas shopping this year, just because of the extensive delays in shipping that have popped up over the course of the last six months or so,” he said during an AASA webinar entitled From Sourcing Management Strategies for Ensuring Availability of Sub-components & Raw Materials.
So now we’re using a decades old thing that’s always existed as an excuse for the current supply problems? This article is acting like Christmas and Chinese New Year are new things. The issue can’t be this…..
The article is pointing out that the supply shortage will escalate due to Christmas and Chinese New Year, not that they are solely responsible for it. A shortage of shipping containers, ports not able to meet demand, thousands of vacant truck driving jobs. And that’s just the delivery aspect. Many factories are operating significantly below average production because of the scarcity of parts and labour. For decades systems have been implemented to satisfy the manufacturer’s desire for JIT (just-in-time) deliveries to lower inventory costs. This made their balance sheets more desirable, but only in an environment that ran flawlessly. Covid has created the perfect storm for a supply catastrophe. Buckle up.
Yes, there’s 100 different things going wrong and its all ramping up. I agree.