“The whole system is totally screwed up,” says Peter Cole, owner of Australian ecommerce company Urban Plant Growers. Two months after it was due to arrive in Sydney, Cole’s $1.6 million order of hydroponic kits and lights, packed into two 40-foot shipping containers aboard a ship that set sail from Shenzhen, China, is still floating somewhere in the Pacific Ocean.

It never used to be this way. In the before times, Cole’s kit was manufactured, shipped, and ready to sell to his customers in a little over six weeks. Then everything broke down.

Cole isn’t alone. A perfect storm of global issues has combined to break the just-in-time supply chains that keep the world going. From the Ever Given getting stuck in the Suez Canal to Covid-19 changing the way we shop, the world is also contending with China’s rapid shift away from coal power. In response, a system that used to run relatively smoothly is now in tatters. “Any one of the issues that led to this would have caused problems,” says Enda Breslin of Ship Bob, a global fulfillment firm. “But all of them put together have caused these massive issues we’re hearing about right now.” The ramifications are enormous, from spiking prices for Christmas presents to a run on Black Friday bargains, empty supermarket shelves, nonexistent car sales, and a frantic grab for the shipping containers usually used to pack and send items around the globe.

The issues knocking the supply chain out of kilter run the gamut from enormous government interventions to the global pandemic shutting ports. But the best place to start, says Marc Levinson—author of two books on shipping containers—is with politicians. “We had governments all over the world stimulating consumption in the face of the pandemic,” he says. The UK, for example, set out a package of economic stimuli in the summer of 2020 that was specifically designed to get people shopping on high streets. In the US, stimulus checks sent directly to citizens resulted in a 4.2 percent month-on-month increase in consumer spending in March 2021. We’ve also been encouraged to spend our money online, requiring a rapid retooling of the way that businesses work. For decades, the retail industry’s reliance on shipping has had what Breslin calls “a beautiful stability”: Retail grew 2 percent every year; retailers would publish two catalogs of new products every 12 months, allowing stores to buy their stock in advance. “There was no resilience built into the system,” says Breslin. “That complacency was borne out of years of success.”

Then everything changed. We began spending far more money online, and the way we live our lives changed. Everyone scrambled to buy a desk for their home office, then there was a run on patio furniture and flour. And they all have to be made and shipped from somewhere: China, which just so happened to be ground zero of the pandemic, with the government determined to take a zero-sum approach to the virus.

Cole expected skyrocketing sales over the Christmas period, but right now he doesn’t know if his goods will make it to Australia in time for the holiday shopping season. “It’s going to severely damage our sales and company,” he says. “We can’t sell anything if we don’t have it.”

Cole’s experience hints at the range of factors currently buckling the global supply chain. First, the items were manufactured incorrectly, which Cole’s suppliers blamed on the rationing of power in China as the country attempts to lurch away from coal power; then Cole’s contacts in China couldn’t find a cargo ship to fulfill the order.

Cole believed his two 40-foot shipping containers were going to be loaded onto a vessel near Shenzhen on November 13, but the items didn’t make it to sea until November 19. “Even after it left port, it’s meant to be an 11-day sailing between Shenzhen and Sydney, but they’ve added another three days,” says Cole.

He isn’t certain that the items will end up onshore even then, and there’s no guarantee that the Australian side will be smooth, either. “Usually it’s a two-day turnaround to get stuff from the port to the warehouse, but I have absolutely no confidence,” he says.

What recommendations would you make to Peter about what he should do next? Explain, using your new-found knowledge of the transportation industry.

Answer rating: 100% (QA)

Peter the owner of Urban Plant Growers is facing significant challenges in the global supply chain and there are several recommendations he should consider 1 Diversify Suppliers Given the disruptions ... View the full answer