In late June, news reports surfaced of supply-chain problems bubbling up again. Some of the headlines referenced the mass disruption that occurred during the pandemic. The New York Times wrote: “It’s All Happening Again.”
Some marine industry companies told Soundings Trade Only they were having challenges. Others, such as the boatbuilder Chris-Craft and the company Lippert, which handles RV, towing and marine products, said they were experiencing none.
Even those marine industry executives who did cite concerns made clear that what’s happening now is not the same as what happened during the pandemic.
“Yes, we are seeing impacts, but definitely not to the level of disruption that we saw during Covid,” says Trish Gyorey, chief supply chain officer at Navico Group.
KMATTA - STOCK.ADOBE.COMBill Yeargin, CEO at Correct Craft, struck a similar note: “It’s nothing like we were having during Covid, but we are having supply-chain issues.”
Numerous sources cited concerns about ocean shipping, with costs rising and capacity dwindling for space on cargo vessels that bring goods to the United States.
Causes of that problem, according toThe New York Times and The Wall Street Journal, include Houthi rebel attacks on ships in the Red Sea. The Associated Press also reported on Houthi activity, writing, “Those attacks have reduced shipping drastically through the route crucial to Asian, Middle East and European markets in a campaign the Houthis say will continue as long as the Israel-Hamas war in the Gaza Strip rages on.”
Craig Fuller, the founder of FreightWaves, which provides data and content for the global freight market and supply chain, tweeted that for the first time since July 2022, tender rejections were above 6%. That means carriers were rejecting loads. As Fuller put it: “This is a huge sign that conditions in the freight market are tightening.”
ANTON BALAZH - STOCK.ADOBE.COMGyorey told Soundings Trade Only that shippers were honoring Navico Group’s contracted rates for ocean freight, “but we’re also seeing a per-container surcharge of about $2,500. It’s not uncommon for the carriers to put a peak-season surcharge on, but that’s bigger than you see some years. It’s impacting us from a cost perspective but not from a supply perspective.”
Yeargin says Correct Craft was seeing a slowdown in order fulfillment from vendors, affecting numerous components required to build boats. “Either they’re having trouble getting stuff or making it,” Yeargin says. “This has impacted our production, but it hasn’t crippled it. So far, things are just a couple of days late.”
The biggest challenge for Navico Group has been shipping from China and Taiwan to the United States, Gyorey says. The company is angling to get container space against companies such as Temu, which is similar to Amazon, and Shein, which sells items in the clothing, beauty and home spaces.
“One of the things that our freight forwarders are telling us is that a couple of the newer e-commerce upstarts from China, Temu and Shein, those two companies are really increasing their presence in the U.S., and they are buying up a lot of capacity,” Gyorey says. “That is Asia to the U.S., so that has a specific impact on that lane.”
At the same time, Gyorey says, pressure on shipping capacity is coming from companies trying to get ahead of impending tariff hikes that the U.S. government announced on products coming from China. “Some of them go into effect in 2025, so manufacturers that are affected by those tariffs are trying to bring things into the U.S. before those tariffs go into effect,” she says. “So you’ve got Temu doing what they’re doing. You’ve got people trying to beat those tariffs — it’s just more strain on capacity.”
Yeargin says that among Correct Craft’s hundreds of vendors, only a handful were having an issue as of late June. “We’ve gone months, probably a year or more without any supply-chain issues. We just had a rash of them in the last few weeks,” he says. “I think it’s a blip. The vendors will adjust. They always do.”
ANTON BALAZH - STOCK.ADOBE.COMGyorey says she expects the challenges to last through the summer but reiterated that, “It’s not like Covid.”
There’s also the issue that it’s hurricane season — with the National Oceanic and Atmospheric Administration predicting above-normal activity this year. Fuller, at FreightWaves, tweeted: “If we get a demand catalyst (hurricane, import surge or tax cut stimulus), we could get a perfect storm: a sharp increase in demand just as capacity is tightening.”
Some moves that companies made to shore up supply-chain resiliency during and after the pandemic are paying off as the current situation unfolds. Gyorey says Navico Group brought some supply back to North America from China. “That helps us from a cost and a supply-continuity perspective,” she says.
Navico Group also recently set up a freight-consolidation center in eastern China, she adds. “We are consolidating a lot of our eastern China-to-Mexico freight at that center, which allows us to be more efficient, to make sure we’re shipping full container loads, to have fewer shipments,” she says. “We did it completely as a cost measure, and now it’s also helping us by simplifying the logistics when they’ve gotten a little more complicated.”
This article was originally published in the August 2024 issue.
