By now, you’ve probably heard that there are some serious challenges facing the global supply chain. From container and driver shortages to port congestion and rising fees, the supply chain is being tested across the board.
Plus VP of Consulting Services Chris Pardo recently took a closer look at some of these issues and posed the question, “Will supply chain challenges get fixed in 2022?” The short answer is “no, probably not.” Many of these challenges are likely to persist well into the future and will require more systemic changes — there won’t be quick fixes.
I thought the article below from Forbes did a nice job of examining how all of this is directly impacting businesses and pushing up inflation (which hit a new 40-year high in March). As an example:
Kent Bikes’ (CEO Arnold) Kamler says that just 300 mountain bikes will fit in a container, and there’s not much he can do to get more in. As his costs have gone up, he’s raised the price of his mountain bikes from $150 to $250, convincing his long-time retail partners that he had no choice. Even so, his profit margins are lower, and the impact on cash flow has been brutal. “I have to borrow more money from the bank to cover ocean freight,” he said. “Bicycle margins are not that big.”
This is just one retailer, but when the same story gets played out on a larger scale, you can see why so many different costs are getting pushed upward — including the price tag on global mobility.
Ultimately, mobility programs only account for a fraction of global supply chain activity. But as part of this larger system, there’s no good way around some of these hurdles. The same issues facing bike manufacturers are likely facing supplier partners who interact with your relocating employees.
That makes it a good time to benchmark your program and consider whether your benefits are hitting the mark, particularly when it comes to your lump sum population. Because of rising costs, funds aren’t going as far as they used to, and an update might be in order. For more on this topic, check out my chat with Chris Pardo in our recent mobility trends webcast.
It’s not just shipping rates. Companies have faced other climbing expenses, too, like port fees. These are incurred when their containers sit at the docks for days or weeks, even if they are helpless to move them due to the congestion and chaos. In an effort to incentivize companies to move their goods faster and make room for incoming shipments, several U.S. ports have announced increased fees in recent months for containers that overstay their welcome.