Tuesday, July 20, 2010

New Wrinkle for Trans-Pacific Peak Shipping Season, Retail Importers Push Asian Suppliers Further into Supply Chain


Facing greater uncertainty in the consumer market, North American retailers are trying to hold off purchases of finished goods until as late as possible by pushing their suppliers in Asia to retain ownership of products deeper into the supply chain, reports The Journal of Commerce. The retailers are trying to hedge their risks and hold onto cash, and that means more suppliers that provided goods on the docks in Asia are being called on to manage the transportation of finished products through increasingly congested trans-Pacific distribution channels.

Many suppliers previously required to just move their products to Asian shores must now get their goods from factory floor to U.S. retail door. The impact of the change in procedure is stretching from the docks of Hong Kong and Shanghai to intermodal networks in North America, where decreased equipment and drivers are already increasing pressure on transload operators. Reduced cycle time and cost savings make this appealing to importers, but it’s causing panic among suppliers and a splintering of the supply chain at a critical moment, with volumes increasing but resources limited.

“The long-existing supply chain model is broken,” said Patrick Ahern, vice president for international at National Retail Systems, a New Jersey-based provider of logistics to retail importers. “And it hasn’t been replaced by a new model.”