The Global Supply Chain Crisis and what it means for our International Events Industry
Right now we are in the midst of a global supply chain crisis but how did we get here? More importantly, what does it mean for the events industry?
It has been a series of unfortunate and colliding events that has led to this dire situation. Let’s have a quick look into some of the reasons.
Consumer spending has gone through the roof during the Covid pandemic. With worldwide lockdowns and nowhere to go, people have been spending their surplus cash on themselves and buying a lot of ‘stuff’. This increase in consumer spending has led to a spike in manufacturing.
Then, at a time when manufacturing has been increasing, we have seen factory shutdowns and port closures related to covid outbreaks. This has created a supply side backlog especially across Asia where the bulk of the world’s goods are manufactured.
On the logistics side, you may not know but a lot of air cargo is actually sent via passenger airlines. With international travel dramatically reduced due to Covid there has been a flow-on effect on the availability of air cargo space. This saw actual air cargo space availability decrease and inversely air freight rates increase sharply.
Container ships have had their own issues. You may remember recently the Ever Given container ship that got stuck in the Suez Canal for a week. Even after it was cleared this didn’t fix the issue but caused a multiplier effect.
What happened after was it caused a build-up of ships arriving into ports at the same time. A port can only unload so many containers at once, so we now have a large volume of containers waiting to be unloaded at ports around the world.
Currently in Los Angeles there are 63 container vessels docked in the water waiting to unload - pre covid this number would typically be around 5. This means the sailing times have increased by up to 50% since pre covid on some lines.
From a financial perspective, the cost to send a container from Asia to the US has increased from around US$1,500 per container pre covid, to US$20,000+ per container today - that’s if you can even get a booking on a ship.
So we have production and shipping delays, and huge increases in logistics costs. What should the events industry be doing to mitigate these risks?
Engage as early as possible with your supply chain partners, never has this been more important as it is right now. We had no choice but to walk away from a tender recently because the deadlines we outlined, deadlines we put in place to ensure on-time delivery, passed before a decision could be made.
If you can, get your supply chain partners on board early and work with them to plan out a purchasing and delivery schedule to ensure on time delivery in these increasingly uncertain times.
The events industry is different to the other industries. You can push back the opening date of a new hotel or restaurant if you need to, you can’t however delay the opening ceremony of a major event.
We love helping our event clients with their last-minute FF&E requirements and doing the seemingly impossible by manufacturing and delivering under almost impossible deadlines. This is something we’ve spent 20+ years working to be able to achieve. However, right now is not the time to expect your supply chain partners to pull rabbits out of hats for you, or those rabbits are going to have to be sent by very expensive air cargo.
The above is just the tip of the iceberg in this issue, there are numerous other factors which are adding to the current situation. A Coal shortage in China, typhoons, ocean freight containers in the wrong places and more.
Hopefully things will settle down next year and shipping times and costs will return to some level of pre-covid normality but until then it’s important to acknowledge the unique situation the global supply chain is facing right now. It’s never been more important to work together and plan early.