Supply Chain Strain: News & Updates on Shipping, Inventory, & Fulfillment

Business being good isn’t always a good thing. Shipping, inventory, and fulfillment are the basic underpinnings of a business that, at the end of the day, must work flawlessly for any sort of marketing efforts to be minisculely worth it – and they are all in flux right now.

Since the onset of the coronavirus pandemic in March 2020, retailers and brands around the world have increasingly been feeling strain on their supply chains. What started as factory shutdowns has snowballed into issues across the entire supply chain, from material and labor shortages to increased freight prices to extremely delayed shipping. Rising costs are making it even more difficult for businesses to get their products delivered to stores and customers alike.

We will keep this blog updated with all of the latest information that marketers and executives like you need to stay in the loop with the current state of the supply chain. Bookmark this article for easy access so you can stay informed!

June 9

The current state of supply chain strain

Supply chain issues that kicked off at the start of the pandemic in March 2020 and spiked in Q4 2021 have remained heightened in 2022. Shipping and fulfillment top-of-mind for 36.8% of ecommerce professionals, making it the 6th biggest marketing trend for 2022.

The top supply chain challenges for brands selling through ecommerce are delivery expectations and transportation capacity.

Technology is a key driver of relief for shipping and delivery companies. 49% of industry professionals from a survey of logistics companies say they’re upgrading their transportation management system and 36% are leveraging automation.

Indeed, ROI’s State of Digital Marketing Survey found that automation and AI are top-of-mind for 33.9% of marketers this year.

As ecommerce continues to surge year-over-year, the supply chain isn’t going to get a break anytime soon. US retail ecommerce sales are expected to reach $1 trillion for the first time ever in 2022.

The labor shortage is also putting strain on the supply chain, affecting company operations for 77% of professionals who are involved in ecommerce fulfillment. The labor shortage has also resulted in higher labor costs for 59% of professionals.

The manufacturing industry has been heavily impacted by the labor shortage. After losing 1.4 million jobs at the onset of the pandemic, manufacturing jobs struggled to recover. According to the US Chamber of Commerce, the durable goods manufacturing industry has more unfulfilled job openings than people who have the necessary experience for these roles.

May 12

Supply chain insights from ROI’s Ecommerce Marketing Trends Report

Today’s successful brands are able to evolve in a dynamic marketing landscape. You generate revenue more efficiently when you fully understand the digital environment where your brand lives. As consumer expectations rise and new marketing channels emerge, how can you feel confident that your brand’s ecommerce strategy is profitable?

In ROI’s Ecommerce Marketing Trends Report, you’ll uncover data from a survey of 170+ digital marketing professionals about the trends that are top-of-mind for their brand. You’ll access exclusive data-backed insights about the current state of ecommerce marketing, like:

  • The top focus area for 50% of brands with over $1 billion in annual revenue
  • Industry impacts of supply chain strain for apparel, home goods, electronics, & more
  • The most top-of-mind ecommerce trends right now according to decision-makers

Seize your chance to thrive in today’s multifaceted digital terrain. Download your report for an exclusive analysis of internal and external data to get a clear picture of ecommerce today.

April 14

Electronics & auto industry supply chain disruptions

The electronics industry has been hit particularly hard by supply chain disruptions. Nearly every digital device developed today is powered by semiconductor chips, which have been experiencing detrimental supply chain issues around the globe since early 2020. With the surge in demand for video streaming, 5G, and cloud-based services that have been growing since the onset of the pandemic, chip manufacturers have been struggling to keep up.

Within the electronics category, the auto industry is struggling because it also needs these chips to install digital displays, safety sensors, and other important capabilities in cars. Part of the issue is that consumer interest in cars declined in 2020 when traveling and commuting took a backseat, bringing the focus and preference to the needs of other electronics companies. In fact, the cost of these components per car has gone from $312 in 2013 to nearly $600 in 2022. By 2030, electronics will make up 50% of the cost of manufacturing a car, up from 35% in 2010.

Manufacturers like Intel, Samsung, and Texas Instruments have multi-billion-dollar plans to build new US plants for chip production in the coming years. Still, Forrester predicts the global chip shortage will continue into 2023.

March 10

How digital marketers feel about shipping and fulfillment

Supply chain woes that have been snowballing since the onset of the pandemic are continuing to impact brands and retailers around the globe as Q1 2022 comes to a close. Now, the Russia-Ukraine crisis is introducing another potential obstacle. Products from gasoline to computer chips to wheat may become more difficult – and more expensive – to purchase.

In January, prices for consumer products grew at the fastest rate in nearly 40 years.

This year, the US Federal Government will spend tens of billions of dollars on port projects to alleviate supply chain strain. It comes as no surprise that shipping and fulfillment are top-of-mind for digital marketers, ranking as the 6th most important trend this year according to ROI survey data that asked 170+ digital marketing professionals about their biggest initiatives and concerns for 2022.

36.8% of marketers say shipping and fulfillment are top-of-mind for their brand in 2022, including 44.2% of managers and 33.7% of decision-makers.

Supply chain concerns also vary in importance between industries. 58.8% of brands in the home goods industry say shipping and fulfillment are a top trend for them this year, compared to 20.7% of apparel & accessories brands. 52.9% of brands in the materials & supplies category say shipping and fulfillment are top-of-mind for them this year.

Hungry for more data from our marketing survey? In our 2022 State of Digital Marketing Report, we reveal expert insights from the data with charts, analysis, and predictions for ecommerce in 2022. Download your report to discover more and help guide your brand toward a profitable year.

February 10

What you need to know about the supply chain today

The new year kicked off with retailers continuing to feel supply chain strain. According to data from Oxford Economics, as of January 2022, supply chain stress was rising the most for transportation, followed by prices, activity, inventory, and labor.

Inflation has been up across the board, and the shipping industry hasn’t been immune to that. At the end of 2021, the inflation rate was up 50% year-over-year for raw materials used in durables manufacturing and up 30% for nondurables.

Start-ups that are looking to solve the supply chain crisis have been getting impressive funding from venture capital firms, receiving more than double in 2021 what they received in 2020. In 2021, supply chain management start-ups received $11.3 billion in funding.

The global supply chain started to experience increased stress around July 2020, with stress climbing in March 2021 and then again around September 2021. Despite attempts from the US Supply Chain Disruptions Task Force, backups at key southern California shipping ports only eased slightly in December and January.

Shipping ports in Long Beach and Los Angeles, California – which bring in 40% of all shipping containers that come into the US – have seen a 67% decline in aging cargo since a program was launched in October 2021 to help quell delays. As supply chain issues shrink in some areas but remain in many others, the policy has been up for reconsideration (and postponed) several times to help keep issues at bay.

The Task Force is also pushing toward a 24-hour supply chain system by adjusting fees at shipping ports to incentivize more shipments to come in during the night.

January 13

Business impacts of supply chain strain: Nike, Home Depot, Ikea, & More

Supply chain troubles are requiring many businesses to raise their prices – including furniture retailer Ikea. The company has been experiencing supply chain cost increases since the onset of the pandemic but was able to absorb them until recent increased strain across the supply chain required them to raise their prices.

Much of its furniture has increased up to 50% in cost, with a spokesperson attributing the sharp rise to “a significant increase in costs across the supply chain, including raw materials, transport, and logistics.”

Supply chain strain has also been causing significant issues for Bed Bath & Beyond. The home goods retailer saw significant growth in 2020 with the industry seeing significant growth at the onset of the pandemic, but sales figures are now dropping below pre-pandemic numbers. The company changed its 2021 sales outlook from $8.1-$8.3 billion to $7.9 billion, representing a loss of up to $400 million.

Bed Bath & Beyond CEO Mark Tritton says that despite customer demand, sales have been pressured “due to the lack of availability with replenishment inventory at supply chain stresses.” For Bed Bath & Beyond, these stresses equated to around $100 million lost in Q3 2021, with December feeling the impact even more.

Other impacted retailers include Under Armour, whose inventory was down 21% in Q3 2021, and Old Navy, which lost an estimated $650 million in sales in 2021 due to supply chain backups. Nike lost 10 weeks of production after factory shutdowns last summer in Vietnam, where 51% of its footwear and 30% of its apparel is made

Home Depot has not been impacted as badly as other retailers by supply chain woes, largely due to taking proactive measures by making major investments in supply chain innovation in 2018.

January 11

The current state of supply chain strain

As we start 2022, the supply chain is seeing some slight improvements from changes being made to prevent delays and backups. Ocean shipping prices are down from September, but still more than triple what they were in December 2020. Supply chain woes weren’t as bad as experts feared over the holiday season, with on-shelf availability at 90% over the shopping period.

After severe delays at container ports in Los Angeles and Long Beach last fall (see our November 3rd update for more on that), President Biden announced at a Supply Chain Disruptions Task Force in December that the number of containers dwelling at the southern California ports had gone down nearly 50%. The average dwelling time for containers at the port in LA was down to four days from nine days in mid-October.

Making optimizations across the supply chain will be crucial to recovery. 300,000 manufacturing jobs were added in 2021, and FedEx added 14.4 million square feet to support package sorting in 2021. The in-the-works infrastructure bill would provide $17 billion in funds to speed and modernize the ports.

Many retailers are raising their prices and expanding their domestic manufacturing capabilities to cope with the issues. At the same time, as workers demand appropriate wages, manufacturers have increased wages by an unprecedented 3.5-3.8%. Costs are rising across categories for consumers and businesses alike.

The Omicron variant poses an additional threat to the labor portion of the supply chain, with cases and hospitalizations rising around the globe. As many businesses learned at the onset of the coronavirus pandemic, factory shutdowns pose a threatening bottleneck. We’ll continue to keep you posted on supply chain updates and their impacts on ecommerce as news comes in.

December 7

How the supply chain crisis impacted Cyber Week

For the first time ever, online Black Friday sales didn’t see annual growth this year. Ecommerce sales hit $8.9 billion after reaching $9 billion in 2020.

With the supply chain crisis leading to extremely delayed shipping times, many retailers strategically decided to start their holiday sales earlier than ever this year. Shoppers who walked into stores or visited their favorite brand’s website in early November or even October would notice exceptional deals that would normally be unheard of outside of Black Friday or Cyber Monday.

Instead of waiting until Cyber Week and risking products not being delivered in time, holiday shopping started early for retailers and consumers alike.

Cyber Monday also declined 1.4%. Online spending on Thanksgiving saw no change, reaching $5.1 billion for the second year in a row.

November 23

A mixed bag of issues: More on how the supply chain is impacting 2021 holiday shopping

Supply chain woes are not expected to have a horrendous impact on holiday sales this year, with retail sales still expected to grow 11% over last year’s holiday season. That would also amount to 8.6% retail growth for Q4 overall.

Impacts will be more significant for smaller businesses, though. For large retailers like Target and Walmart, spending money to hire extra workers, get extra containers, or purchase materials that have skyrocketed in price isn’t so difficult. But for small retailers that carry everything out with a small staff, getting products created and delivered is a lot harder this holiday season.

The supply chain issues are also a piece of the puzzle that is rising inflation, which is currently at the highest levels since 1990 – yet another reason why holiday shoppers have been right to start shopping early. Many retailers are offsetting the added costs from supply chain strain by putting them onto customers.

November 18

What happens when the biggest shopping day of the year happens in the middle of a supply chain crisis?

Black Friday is the busiest shopping day every year. Last year, Cyber Monday was the biggest day for online shopping in US history. And the other days that make up Cyber Week – the five-day period spanning Thanksgiving to Cyber Monday – always rank among the top shopping days of the year.

Almost two years into the coronavirus pandemic, marketers all understand that not everything shakes out like you think it will – and sometimes, the thing your brand least expects is what happens.

This year’s Cyber 5 will be no exception, with supply chain issues that started to crop up at the beginning of the pandemic snowball into a global supply chain crisis. From material and inventory shortages to labor shortages and wage concerns, all the way to clogged shipping ports and a lack of available containers, are all making it difficult for brands to produce products and get them out to customers.

To cope, many retailers have been spreading their Black Friday and Cyber 5 deals throughout the months of October and November instead of having specific deals on Black Friday. 67% of retailers are encouraging customers to shop early this year. The hope is that consumers will purchase gifts earlier to help ensure that they arrive in time for the holidays. In fact, 3 out of every 4 retailers will offer fewer Black Friday deals this year.

November 12

Supply chain issues make for yet another unprecedented holiday shopping season

It seems like headlines rave about holiday shopping starting earlier than ever every year, but 2021 is no exception with the recent surge in supply chain strain. A survey conducted by Oracle in September found that one in every five Americans had already purchased their first holiday gift.

Consumers are finding various ways to minimize the impact they feel from major issues with shipping and fulfillment during the busiest shopping time of the year. 44% of Millennials plan to purchase more gifts than they need to just in case some orders are delayed or canceled, while 58% of Baby Boomers say they’ll try to avoid the issues by purchasing more gift cards than usual.

In-store shopping may be more emphasized this year, with 66% of consumers now feeling comfortable shopping at indoor shopping malls (especially when mask mandates are enforced). In fact, 27% of consumers say they’ll be making more purchases in stores than online this holiday season to avoid supply chain issues. (For more news on how the coronavirus pandemic has transformed shopping, visit our How COVID-19 Is Impacting Ecommerce blog post!)

Retailers should also prepare for a potential surge in holiday gift returns that could even further complicate the supply chain issue. Your brand’s audience may dictate how much of a problem this is for you – 48% of Millennials plan to return half to all of their gifts, while 90% of Baby Boomers have no plans to return any of their gifts!

November 8

How Target and Walmart are mitigating supply chain issues this holiday season

Target and Walmart are assuring customers that their stores won’t be impacted by global supply chain issues this holiday season. With more cash flow and resources than smaller businesses, these large retailers are able to more easily navigate the uncertain waters.

Target is focusing heavily on providing an easy holiday shopping experience this year. To keep to that promise, Target is rolling out changes to its shipping infrastructure including hiring 30,000 permanent team members for its supply chain and moving the majority of their containers at clogged southern California ports (more on that in last week’s update) during the night to keep ports clear during the day.

Target’s stores-as-fulfillment model also makes it easier for customers to get their products. According to a press release, the retailer’s inventory is up substantially over this time last year.

Walmart is working to improve inventory levels and was up year-over-year in Q2. To keep their promise of mitigating supply chain issues, Walmart is making changes like expanding delivery capabilities to deliver online orders straight from stores, hiring 20,000 permanent supply chain positions and over 3,000 new drivers, redirecting transportation routes on both land and sea, increasing pay for supply associates, and more.

November 5

Not a container shortage, but a surplus: What’s going on?

The reasons underlying the global supply chain crisis are manifold. Brands and retailers around the world are facing issues ranging from material shortages to not being able to get products onto containers to major shipping delays.

One of the biggest issues revolves around not a shortage of containers, but a surplus. Some major ports are overflowing with empty shipping containers, making it difficult for ships with full containers to get to land.

Two southern California ports that together bring in 40% of all shipping containers that come into the US are currently facing this problem. Typically, when a ship comes into port, it will drop off a container and pick up an empty container in its place. But with docks full, ships aren’t able to offload their full containers to pick up the empty ones. There’s also not much extra space for empty containers at the ports.

This results in a continuous cycle where ships aren’t able to offload their products because ports are full, and ports aren’t able to get rid of their containers because the ships can’t remove their full ones.

To help the issue, the mayor of Long Beach, CA changed zoning rules to allow four empty containers to be stacked on top of each other instead of just two.

The many pieces of the supply chain weren’t prepared for the surplus of ecommerce purchases that has been happening since March 2020. The backlogs at US ports are expected to continue into mid-2022.

October 29

What’s the reason for the supply chain strain?

Businesses, retailers, and consumers alike are all becoming increasingly concerned with supply chain congestion that is causing major shipping delays.

The COVID-19 pandemic catalyzed what some are calling a shipping crisis. With shoppers being more frivolous about their discretionary spend along with shopping less in stores last year, retailers were selling less and had less of a need for their shipping containers, and the containers were put away and saved for later. Then, consumer demand for products surged earlier and more than expected, leaving retailers and container companies unprepared and unready.

Now, it’s incredibly difficult for many retailers to find available space on containers, or even available containers in the first place. With demand for freight high and supply so low, it’s becoming very expensive for brands to ship the products their customers buy – and their products are still likely to be delayed.

Rising freight costs are a huge risk to profits. In some cases, freight costs are over half the value of the products being shipped, which is typically unheard of for most industries. Shipping rates and import costs are increasing each month. Inventory flow is almost impossible to predict, making it difficult for retailers to plan or make decisions with precision.

Consumers are feeling the brunt of the impact with delayed shipping times, which is often a deciding factor in a customer’s purchase decision. It will be crucial for retailers to communicate realistic expectations with shoppers, especially as we approach the holiday season.