Shortage of supplies and containers could lead to shortages on Good End and Christmas
Given the shortage of containers that has occurred worldwide since mid-2020, various industrial sectors suffered damages in delivery times and logistics planning.
Due to the shortage of inputs for the production of electronic devices, the lack of containers, the increase of up to 300% of international freight of goods (in the case of Mexico from Asia, freight increases between 900% and up to 1000%) As well as a reduction in port activity in key ports for international trade, there could be a shortage of products for dates of high demand such as Good End, Christmas and the Three Wise Men , especially in electronic products, toys and clothing, as highlighted by an analysis from Drip Capital México , a fintech specialized in financing exporters and importers.
Given the shortage of containers that has occurred worldwide since mid-2020, various industrial sectors suffered damages in delivery times and logistics planning .
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According to Drip Capital's analysis, this shortage is expected to be overcome until 2022 , so there is a high possibility that, in high consumption season, there will be less availability of products from industries such as textiles, toys and electronics (especially telephony and computers).
According to Descartes Datamyne, the United States faces a historical stagnation of containers, because of every 100 units that arrive at its ports, only 40 are exported, that is, 60 are accumulating on a route in which 900 thousand containers are moved per month on average.
On the other hand, in the middle of this year, there was a new delay and logistics crisis caused by an outbreak of COVID-19 in the area of the Yantian port, Shenzhen, China, the third most important port in the world, the same as presented a drop in operating capacity of 30%, with an estimate of 175 thousand containers delayed.
In addition to this, since December 2020 the alerts have been lit in the face of a clear shortage of semiconductors that, motivated by high demand and low production of these inputs, has caused havoc in industries such as the automotive and electrical appliances.
According to estimates by the consulting firm Alix Partners, this lack of inputs will cost the automotive industry up to $ 110 million in revenue for this year.
Despite a possible shortage of imported products, mainly from Asian countries, when we talk about large electronics and video game brands (which have remained stable since last year), it will be unlikely to see their prices affected, beyond those directly related to inflation or exchange rates. In situations like this there is a potential for the generation of phenomena such as the proliferation of informal secondary markets , dedicated to reselling these goods at a premium and second-hand.
However, for the micro or small importer (the one that brings, for example, backpacks for the school season or pajamas for winter) it is likely that prices will be affected due to the availability of production at origin, which can raise the cost for place purchase orders to Mexico.
The route to get to Mexico
According to Drip Capital's analysis, the three countries from which Mexico imports the most in high seasons are: China, South Korea and Thailand.
Of these, the main maritime export points are the ports of Shenzhen, Xiamen, Shanghai and Qingdao, in northern China; Busan in South Korea and Bangkok in Thailand.
Regarding the route and times of freight transfers, the fintech analysis highlights that imports made from these points usually arrive directly, when crossing the Pacific.
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However, there is a more competitive alternative in terms of cost, but more extensive in transit time: the route known as “Cross Trade” which, by sea, makes stops through some European countries to disembark in Mexico. This process reduces logistics costs by up to 66%, compared to more direct shipments , but increases the times that go from 45 to 60 days.
These cargoes leave countries such as Pakistan, India or Arabia and take their course through the Suez Canal in the Mediterranean. They generally tranship in a port in northern Europe such as France, Germany or Belgium and connect to Mexico practically directly, making some minor stops. They arrive in Mexico through the Atlantic, in the Gulf, especially in Altamira and Veracruz.
The three countries from which Mexico imports the most in high seasons are: China, South Korea and Thailand / Image: Depositphotos.com
According to the expert, another aspect to highlight in the calendar of the importing process is the passage through customs , because sometimes prevention programs, such as merchandise inspection traffic lights, can delay the arrival of merchandise. In addition to this, there is the possibility of generating extra expenses in the event of acquiring an unforeseen tax .
Based on these challenges, Drip Capital proposes that Mexican importing companies take the following precautions when placing orders to meet the demand of high seasons :
- Delivery times may vary according to the season. It is very possible that there is saturation of freight during high seasons, since shipments are generally made in weekly periods. For this reason, there must be at least one or two more weeks contemplated in the logistics calendar in case there is a delay in the shipment of the freight or an unforeseen event in customs.
- Have different sources of financing. Having financing options can be of great help if you are faced with a difficult situation with importers. Likewise, it is important to consider your small and medium suppliers, as well as their logistics processes , because if they have capital or coordination, it can cause unexpected delays in your own operation. For them, consider agreements to offer financing to your partners or suppliers in order to streamline your supply chain.
- Diversify the items that the company sells . A completely valid option for Mexican importers would be to diversify the products they sell. In other words, a company that sells a category can expand its catalog to similar products from other brands, in order to maintain its sales with other consumers.
Like all markets, trade is cyclical: eventually there will have to be a recovery, including the proliferation of new industries. Beyond a cliché, times of crisis are times of opportunity, so we will eventually notice the development of new industries, products, services and technologies, as well as the gradual recovery of the economy and of Mexican imports and exports.