Mercado | Insights - The dam is breaking

Insight: The dam is breaking

Article | What I learned in Supply Chain

The dam is breaking

May 25th, 2021
5 minute read

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Every week, Mercado CEO Rob Garrison pens his latest learnings from the supply chain industry as part of an on-going series. Each article aims to share a little insight into what's going on that week, and to help foster discussion amongst industry professionals across levels, geographies, and companies.
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I recently asked a hot topic question in last week’s #WILISC: “Is the dam about to break?” After I wrote my last post, I spoke to two major importers in order to understand how price increases were impacting their business overall.
Although there are all kinds of articles out right now about the issues happening throughout the supply chain, talking with these importers one-on-one really gave me a lot more color on all of the cost pressures they face on a daily basis.

These companies have so much demand that they can’t even keep up with it. However, with all the cost increases happening on a weekly basis, they aren’t profitable. If there isn’t relief soon, they will either have to raise their prices dramatically or quit taking new orders altogether.

Just some of the cost increases they currently face include:
  1. An increase in cost of their primary raw material — steel — which is now at a 13-year high. With such a short supply, the cost is expected to increase even further
  2. On top of the rising cost of steel, it is also subject to a 25% duty
  3. Overall labor costs have risen dramatically as they can’t get enough workers in their distribution centers
  4. Domestic transportation costs have doubled
  5. International transportation costs are up five fold
When I was an importer I never had to contend with any of these issues. Back then, we also had a much simpler “hub and spoke” model designed to minimize transportation costs. Today’s importer does not have this luxury. Buy anywhere, sell anywhere has made supply chains much more complex. Layer on the international “events” of the past year and a half, and now the massive inflation, and you have a perfect storm.

Fortunately, the tools to help importers manage through this have become increasingly sophisticated as well for those who have begun to digitize their supply chains.

About the author(s)
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Rob Garrison
CEO, Mercado Labs
LinkedIn

About the Series

Each week, Mercado CEO Rob Garrison pens his latest learnings from the supply chain industry as part of a series run for his LinkedIn followers. Each article aims to share a little insight into what's going on that week and to help foster discussion amongst industry professionals across levels, geographies, and companies.

You can connect with Rob on LinkedIn by following this link.
Mercado | Bring Order to your Imports
                                               
© Mercado Labs Inc.
From us to you...

Thank you for using Mercado. Our goal is to empower businesses to better navigate the complex world of importing. We know data security is of paramount importance, so we place high standards on ensuring it is safely and respectfully secured. We are committed to following and continuously evolving best practices to support this principle. Your data is yours, and we guard it closely. We do not sell any of your information, and we will always be fully transparent on how we collect and use your data. That's a promise.
Mercado | Bring Order to your Imports
                                               
© Mercado Labs Inc.
From us to you...

Thank you for using Mercado. Our goal is to empower businesses to better navigate the complex world of importing. We know data security is of paramount importance, so we place high standards on ensuring it is safely and respectfully secured. We are committed to following and continuously evolving best practices to support this principle. Your data is yours, and we guard it closely. We do not sell any of your information, and we will always be fully transparent on how we collect and use your data. That's a promise.