Supply Chain Challenges for Small Business | Episode #002
On this episode of the Small Business Matters podcast, we focus on a problem that’s looming just off the coast of California as we speak, the glut of inbound freighters waiting to be unloaded and reports of short supplies in many industries, and rising prices at many retailers. Gretchen Blough serves as Customs Brokerage Manager for Logistics Plus in Erie, Pennsylvania. She’s an expert who has appeared several times on American Public Media’s “Marketplace” and “Make Me Smart.” So we reached out to Gretchen to ask her if she could make us smart on this small business matter, the rising cost of shipping, and what’s going on at the ports.
Interview Transcript
What follows is a loosely edited transcript of our interview with Gretchen.
[Gary]: So there’s a lot going on in the world of the supply chain. It’s in the news every week. The other day I was reading about the cost of shipping. What’s going on there with shipping containers?
[Gretchen]: Well, shipping containers before the pandemic, we’re about $2,500 for a full container. Right now, the costs have gone up depending on the trade lane from $14,000 to $40,000. There’s a lot of shipping consoles, which are the consolidated shipments within a container. So that costs can be divided among a bunch of shippers, a bunch of importers, but we do see a lot of importers that are bringing in full containers. So that gets pretty pricey for them.
[Gary]: We hear a lot about the backups at the ports. Long Beach has set a new record for waiting ships. Is that true?
[Gretchen]: Yeah, that’s, that’s true. Over the weekend, there were 76. It’s hanging in the eighties right now, but that’s changing hour by hour, and I haven’t checked it recently. It’s been a busy morning, so not sure exactly where it stands now. I was advised by a contact that they were doing a show on this same topic and they had to keep updating it throughout the day in their script.
[Gary]: What’s driving the delay at the port?
[Gretchen]: Well, I mean, there’s just such a, such a demand for everything. Last year, manufacturing was off, shopping was off when people went shopping, they typically did it online. So brick-and-mortar retailers are trying to get caught up with their warehousing with our stock. Speaking of warehousing, everyone has been switching to just-in-time inventory. So when they went through their stock last year, either parts or retail items, they were left with nothing, and that’s why the store shelves are empty. That’s why, if you need a replacement part for anything, you have to wait weeks, months. You know, as an example, I had a screen that was damaged and my local hardware store store can’t even get the parts to fix it. And it’s been, I took it in at the beginning of summer because obviously I want to open the windows, and use the screen and I still don’t have it. And they keep calling and apologizing, but I know there’s nothing they can do. I mean, I work in the supply chain. So if they say they can’t get the parts, I know that that’s absolutely true.
[Gary]: So the cargo that’s coming in, what I hear you saying is that the explosion of e-commerce is really helping to spur that along. And people are getting allocations on the ships for, Halloween is the next season for retail, and beyond that Thanksgiving holidays, what would you tell retailers? Should retailers be a lot further along now than just putting their orders in? They would have had to have been several months ago.
[Gretchen]: Yeah. It’s, it’s worrying me because I’m not an early Christmas shopper. I tend to wait until, you know, more towards December, but I found myself picking up stuff over the weekend because who knows what’s going to be available when December rolls around. So yeah, if retailers haven’t already placed their order, they might be a little bit out of luck there.
[Gary]: What about larger industrial items, things that wouldn’t necessarily fit into a crate, but let’s say wind turbines and a lot of the environmental development or construction that’s going on. How do they transport that with, with this situation with shipping?
[Gretchen]: It’s called breakbulk, and basically, they put it on a ship. It’s not in a container. What has been happening is because the container prices are so high. A lot of these breakbulk ships are being refitted to accommodate containers. So the space is getting more and more limited for breakbulk because of this. And that would include, you know, wind turbines, mining equipment, a lot of times, great big storage tanks, that type of thing. Fortunately, solar panels will fit in a container. So it’s not affecting that aside from the high cost of shipping, but that’s one example where an importer will fill an entire container and then they have to bare that entire cost of the container.
[Gary]: Is it impacting exports?
[Gretchen]: It is impacting exports. We see delays in the port there as well. Since I’m a customs broker, my role is mostly imports, but there’s, you know, too many ships are coming in, not a lot of ships can leave. So there are delays there. We’re seeing things being rolled over and whatnot so that the actual date of departure gets pushed out or if it’s not available, that needs to, they need to wait until the next ship, that type of thing. So it’s, it’s impacting everyone, whether importing or exporting. Yes.
[Gary]: So can you talk about some examples where things have taken additional time?
[Gretchen]: Well, I spoke to our import manager, and she said, on one example, they paid for expedited premium service from China, which takes 15 days. And it did take 15 days. And then it sat in the port of LA Long Beach for 30 days. And then it finally got offloaded and sat in the terminal for another 30 days. So that expedited service was two and a half months when it should have been 15 days.
[Gary]: So the cost of the space on the containers is higher. What options do you have? Do you buy smaller lots and ship by air? I mean, what are people doing? I heard one story about buying or looking at buying their own ships, retailers investigating buying ships.
[Gretchen]: Yes, that’s definitely the case. They are looking into cutting out everyone involved and using their own ships. But, still that won’t help with the port backup. And other things that are contributing to the port backup is there’s a shortage of chassis, there’s a shortage of drivers. There’s a shortage of stevedores and, and whatnot to offload everything. I mean, it’s a real labor shortage as well as just the ships you know, putting some more ships into the port. If they’re privately owned, they still have to have people on those ships to run them so, you know that’s a really big problem with the labor.
[Gary]: I heard that rail cars, once it comes into Long Beach, a lot of it is transported to other hubs around the United States. And are there any backups in those locations, Chicago or Memphis?
[Gretchen]: Yes. Chicago, Memphis, Kansas City, and the other thing is when they can’t predict when exactly it will offload and be on the train. In those cases, what is done is there’s an in-transit bond, which is cut. And then, the customs clearance is done in the inland port. Well, it’s a little bit difficult to cut it when you don’t know exactly when it will be able to get out of the port of Los Angeles and on the rail. And once it gets on the rail, you have two free days in the rail yard, and the clock starts ticking on those immediately. Most seaports give you a couple of free days, at least airports as well, give you a few free days at least. There are two days you have free in the rail yard, and it starts ticking immediately, whether it’s a weekend or not. So you have to make sure you can get in with a chassis or a flatbed, depending on whether they’re unloading it, there are, or however it’s being handled and get your freight out of the port, the rail yard immediately. So that’s been a little bit problematic considering the shortage of everything there is.
[Gary]: Well, I certainly hope this doesn’t last too long. Did, did the situation in the Suez Canal, that one ship that was blocked and it backed everybody up, that was over on the other side of the world, did that impact the US?
[Gretchen]: It didn’t impact us personally. Most of that stuff was headed between the middle east and India, and Europe. From my understanding, we did have a number of phone calls that people didn’t understand how things were routed and you know we’re quite concerned as to if their cargo was behind that ship, but we didn’t have much impact here.
[Gary]: Well, this has been so enlightening. I want to thank you very much for coming on and sharing your insight with us.
[Gary]: Well, that was Gretchen Blough, from Logistics Plus in Erie, Pennsylvania, Gretchen told us that a container ship generally holds between 20,000 to 24,000 TEU or 20-foot equivalency units. And these are the smaller 20-foot containers. So multiply that volume by 70 or 80 ships. And you get an idea of the magnitude of the challenge. We’ll be watching this story as it develops and bringing you news on future episodes.
Experian wants to shine a light on Diversity, Equity, and Inclusion by sharing stories told by business owners, policymakers, or anyone who believes actions speak louder than words when it comes to creating jobs, equality and inclusion in the workplace, and what it feels like to run a small business when the odds are stacked against you. We call this segment Inclusion-Forward. Our first story comes from Tarsha Joyner, Owner of Mrs. Joy’s Fabulous Tasty Treats in Lynchburg, Virginia.
Lynchburg Business Owner Makes a Big Bet on Fabulous Tasty Treats
When Tarsha Joyner came to the phone to share her story with Experian, she was juggling batches of tasty treats coming out of the ovens at her downtown Lynchburg, Virginia bakery – Mrs Joys Fabulous Tasty Treats. Baking wasn’t something she enjoyed in her early childhood, it wasn’t until she attended a business class at Lynchburg University when a class assignment had her inventing an imaginary bakery. After baking some samples, designing packaging, and enlisting the help of her son the adventure began.
Tarsha would eventually go on to appear on Food TV’s Project Bakeover and compete in local small business contests, re-investing their winnings into upgrades on her downtown storefront, an abandoned building that Tarsha and the landlord worked together to recondition as a bakery. But her biggest gamble was taking out a home equity loan to fund Mrs. Joys Fabulous Treats.
We hope you enjoy listening to the interview as much as we did listening to her describe her journey. Follow Tarsha on Instagram @missusjoy where she shares photos of her tasty creations.
Got a story about Diversity, Equity, and Inclusion? Email us at smbmatters@experian.com.
Listen to the full episode on any of these platforms:
