How COVID-19 has affected importation of our product
Lets talk about the current shipping challenges around the world for a second.
Pre-Covid, PacRim would carry a large amount of stock on site and could easily order additional stock or customer requested units when needed. A container order was built every 6-8 weeks and typically orders would arrive within 4-6 weeks through Montreal, which meant customers were not usually waiting long to receive their purchased unit, if at all.
We managed to make it through the first year of Covid without this changing very much – we ordered a great deal of product that arrived coming into Winter 2020 with hopes of preparing for Spring 2021 and we sat on a lot of it over the winter. Naively, we thought that we had made it through what the rest of the world was facing. 2021 came upon us and we started to see the challenges stack up and the hurdles almost seemed to come faster and faster. We sold out of product in March, saw a 60% price increase from our factory between January and August, and containers that were ordered in February 2021 didn’t arrive until December 2021. In fact – we received 6 containers all within 10 days of each other due to the backlog.
So what happened?
In short: Increased consumer spending created a strain on the global shipping industry. Due to the lack of domestic manufacturing, we rely on importation of goods, materials, food, to serve our economy. With consumer demand skyrocketing, international suppliers of these goods had to increase production to meet this demand. Introduce a global pandemic and now you have a supply/demand imbalance. Manufacturing facilities were shut down due to outbreaks and lack of materials, so production essentially came to a halt in many industries, and prices increased to counteract the demand. When these facilities finally managed to come back to full production capacity, what was waiting there in the shadows? The great container shortage.
Our first instance of this was in May 2021 when one of our suppliers informed us that they were unable to book shipping as they could not procure containers. Slowly we started to see this throughout our other suppliers, which in turn lead to increased shipping costs. Within only a few weeks we saw our transport costs triple. In June 2021, our factory was forced to ship through the Panama Canal instead of Montreal due to lack of port space and ship routes available, which added weeks onto the shipping time. What used to be a simple journey from Estonia to Germany and then across the Atlantic to Montreal turned into multiple legs, multiple ports, transitioning onto numerous ships, before finally coming to Vancouver.
At one point, L.A. Port had 100+ ships waiting to dock and offload – three of our ships were part of those. This is largely due to the influx of demand on consumer products, however it’s also a capacity issue. L.A port, for instance, can only offload three ships at a time, and through the pandemic have only been capable of offloading two due to the staffing shortage and the shortage of trucks to offload. Furthermore, the COVID precautions and restrictions are so significant that the port will shut down due to one case. This is being seen in many other ports across the world, like Shanghai for example, which had 150 ships waiting to anchor at port. Not only does this cause congestion, but it has a ripple effect throughout the consumer market.
The reliability percentage on West Coast arrival time in July 2021 was 15.7% meaning only 15% of ships were meeting their schedules, and this only got worse as the weeks went on. Many carriers started announcing blank sailings, meaning the ship will skip port calls, skip an entire leg of the journey, or even cancel the sailing to try and reduce the congestion and help other ships get back on track. In November 2021, Port of Vancouver was taking up to 3 weeks for a ship to come into port and offload – a process that used to take 2-3 days. Due to the influx of containers, space was maxed out, and even if your container was offloaded from a ship and cleared customs you still were denied pickup because they couldn’t physically access your container. Returning your container to the port was completely refused as there was no space for detention, resulting in thousands of dollars in fees because we were not able to drop off. This also means that those empty containers cannot be exported internationally in a reasonable time, causing issues in European and Asian ports, which starts the whole cycle again.
The supply chain right now is a logistical nightmare and is one that has been calling for change for many years, maybe this is the catalyst it needed. But how do you change a global industry like this – instant change cannot happen overnight. And this is just one issue.
Importing product is difficult – you’re working with language barriers, time differences, shipping challenges, port strikes, lack of containers and space on ships, labour shortages, you name it.
We have had to constantly shift and re-think the business model almost daily some weeks, which causes a lot of stress on our team, and makes you question your actions a lot of the time. As such, we had to be creative on our strategies and techniques, but it forced us to make quite a lot of decisions in a short amount of time, and it resulted in a lot of strides in our business – policies and procedures, marketing decisions, distribution opportunities, new products etc. that could have taken us years to do otherwise had we not been forced to make it happen and adapt to the environment around us.
We are now really focusing on trends, thinking 6 months ahead at minimum, and making our own fate by proactively ordering product and determining what is going to be popular. We are also thinking more in seasons and offering collections, rather than just offering our entire catalog to customers, which helps us control the product and when it comes in which reduces a lot of stress on our end. We also are trying to diversify our product lines to offer different items throughout our traditional off-seasons to remain relevant, and to expand our reach to new clientele.
While this past two years has been stressful, and often at times felt that it may not be worth it, the PacRim team undoubtedly learned priceless information about our industry and is looking forward to utilizing those lessons to create better business practices in 2022.
“If you’re not learning, then you’re stagnant. If you’re stagnant, then you’re not evolving, and the business isn’t progressing”. – Seth Rollins