The landscape has changed for automotive aftermarket parts suppliers and they, along with jobbers and repair shops, should get used to the “new normal” facing the industry.
Brandon Kraal, senior vice president of international at eShipping, a logistics and transportation management company, spoke to aftermarket suppliers during a recent webinar and outlined challenges facing logistics and how the aftermarket needs to buckle up for continued hurdles.
“I don’t think anybody at this time feels like this volatility is going to cease at any one moment — [it] will continue,” Krall said during the Sept. 1 edition of the Automotive Aftermarket Suppliers Association’s Supply Chain Webinar Series. “So we’ll need to continue to adapt, adjust our supply chain strategies and stay nimble.”
Additional tariffs were already causing issues for importers. Then COVID-related issues started creeping in during early 2020 before blowing up in March that year. And now the Delta variant has added another round of headaches.
“When COVID hit, whether it was us or our neighbours, it really started changing how [people] spend their money,” Krall explained. “People stopped spending money on services, such as taking trips or flying or taking vacations and really starting to spend money, whether it was on consumables, especially [on their] home — home remodels, home additions, furniture, home office supplies, fitness, whatever it was. We drastically shifted to a consuming economy, which I think really hit most importers at that time as a surprise.”
And it hasn’t stopped. The threat of further restrictions as a result of the Delta variant, expect further spending on things like furniture and home goods. That could further congest already busy shopping ports.
“So we should expect and no longer be surprised of the operational challenges that we’re all seeing, whether it’s securing capacity and space at origin to the congestion at the U.S. ports to the rail issues,” Krall observed during the webinar entitled Global Aftermarket Supply Chain Logistics: Dealing with Freight. “And it’s really at this current point becoming the new normal or the normal state of affairs.”
Major terminals have been closed or faced delays for a variety of reasons, but all are generally related to COVID-19. The Yantian Port in China was closed for much of May. The Meishan Terminal had a COVID case there last month and was to return to full operation on Sept. 1. Then Shanghai’s airport terminal saw an outbreak.
“And so when these when these outbreaks occur … it not only impacts that specific port of loading, but all the ports around it because everybody will be trying [to re-route their shipments out of there],” Krall said.
Alternates like Vietnam, India and Malaysia have had their own outbreaks and closures while trying to handle the influx of shipments sent their way.
“We’re continuing to battle the effects around the world of COVID. And that’s not to mention all the impacts in the United States as well,” Krall said.
And then there are other challenges that pop up unexpectedly. Take, for example, the Ever Given cargo ship that got stuck in the Suez Canal impacted hundreds of vessels, including 96 cargo ships. Canada contributed to delays with a port strike in Montreal that threatened the delivery of essential goods and services across the country. Wildfires in British Columbia disrupted shipments from ports. Weather, like typhoons, caused a week-long delay in Shanghai; flooding in western Europe put a halt to everything.
Furthermore, employment challenges are also plaguing the shipping industry. “[With] cargo backed up at ports, warehouse capacity is extremely, extremely tight. Plus, it’s hard to get labour to work in the warehouse,” Krall said. “Trucking capacity is extremely tight.”
This and on top of they are being cheap since price per container went up 5x from $3000 per unit to $15,000 per.