Christmas in March? How One Chinese Port Might Shake Up Your Holiday Plans
Nintendo Switch, iPhone, Tamagotchi, and Teddy Ruxpin… these have all been the hottest retail items in holidays past, and they all happen to be electronics too. Coincidence? Nope. And with online electronics sales up 145% during the 2020 holiday shopping season, this trend isn’t going anywhere anytime soon.
But what if I told you that 90% of the world’s electronics go through the same port? And what if I told you that port had a recent COVID-19 outbreak, leaving a backlog of over 160,000 40-foot containers, causing a domino effect on the entire shipping industry that might take a year to get sorted out?
Well, friends, let’s talk about the Port of Yantian.
Yantian, a port just north of Hong Kong, was shut down for almost a week at the end of May due to a spread of coronavirus amongst dock workers. And while, thankfully, the infection rate has since improved and many operations have resumed — the damage has been done.
The backlog is being felt all over the world. From ships waiting to dock in Guangdong to empty containers stockpiling in the U.S., the already-stressed-out shipping industry is spread so thin from the pandemic that just one event, like what’s happening at Yantian, can cause lasting waves to a very delicate ecosystem. And this is one storm that might take months, or up to a year, to calm.
So what do we do now? How do we save the holidays, and — more important — how do we help resolve these supply chain fractures?
Balance Efficiency with Resilience
Let’s start by asking ourselves, “Why do 90% of the world’s electronics go through the same port in the first place?” It’s because supply chains are designed to be hyper-efficient, and in this case, using the Port of Yantian has become the quickest and most cost-efficient way for shippers to send the next holiday crazy all over the globe. Until now.
In order to build resilient supply chains that can withstand pandemics, natural disasters, and political unrest, there must be trade-offs for efficiency — resilience comes at a cost. For example, manufacturing everything in China might seem like the cheapest option, but having some diversification with near-shore sourcing would certainly make the current situation a bit less painful.
The same theory applies to diversity in shipping ports. Sure, it might make the most short-term financial sense to use the same Chinese port for goods made in China, but this line of thinking certainly won’t make a resilient supply chain. Instead, we must start leveraging some different routes to spread capacity across multiple ports — even if it’s not the most efficient method. Otherwise, we run the risk of big delays when a disruption hits.
Gain Visibility Into Downstream Impacts
Designing a resilient supply chain helps in the long run, but what about a disruption that’s happening right now? Identifying an event, like the current situation in China, is the first step. That’s visibility. But here at Blue Yonder, we talk a lot about end-to-end visibility, and that means providing context to see downstream impacts.
For example, let’s say you have one of the containers in the logjam at Yantian. You need to know the impacts to inventory, production capacity and sales. The modern-day supply chain uses AI and ML to guide and inform human decision-making by providing insights to see, understand, act, and learn on real-time information from the entire digital ecosystem.
Break Down Silos
Historically, supply chains have been comprised of silos that don’t share data across systems, departments or suppliers. But now that we’re looking at visibility holistically, we can start to coordinate across the verticals and break down those silos. By sharing real-time disruptions, inventory and forecasts, communication is greatly improved and decision-making can be dynamic — rather than always reactive.
Removing the silos leads to a more collaborative supply chain. This collaboration ensures events are identified and downstream impacts are minimized, whether this is the Port of Yantian, the Suez Canal, or the next global shipping disruption.
Blue Yonder’s SaaS-based supply chain solutions can help solve strategic shipping issues, like balancing efficiency with resilience, but we also can help navigate short-term disruptions — like getting the most-popular electronics from China delivered to the right places, just in time for the holidays.
To learn more about building a resilient supply chain, head over to our thought leadership hub.