It’s hard to predict at exactly what scale the effects of Covid-19 will have on logistics and 3Pl nationwide, but it will be affected. With all the panic and confusion consumers have rushed market places all around the world in an attempt to stock up on essentials. Also, suppliers have begun to stockpile parts when they are available. Some call this wise planning, but do they realize the effects it will have on the supply chain? 3PL providers can expect to see a fast increase as logistics companies struggle to keep up with the demands of restocking shelves, and filling orders. With all the fear of shortages, consumers will want their product at warp speed, also making expedited freight feel the pressure also.
Factory Closures in China and 3PL
As Chinese factories are being closed, we will be affected by this. Many of our own factories rely on the parts that come from China. It’s easy to say “we will depend on American Made products during this time”, but what many fail to understand is that even products “made” here in the US are using foreign parts. Warehousing and assembly divisions of 3PL companies may see a decrease until parts become available again.
As shortages become more apparent, and the availability of a product begins to decrease, we may see price gouging. A great way to help in this area is by not buying into this over purchasing. Whether that means you are at the grocery store, and you want to stock up, or that means you are a factory hoarding available parts. If we all do our best to be fair, the hit should be minimal for all businesses. As 3PL freight companies see decreases in cargo loads, their prices may increase to be able to compensate for the loss. In contrast, prices may also increase as they become overloaded.
During this time of pressure, it is essential to stay informed. 3PL providers should stay informed about what is happening overseas. With shipments being held overseas, with no real time frame to plan for, alternate options should be considered. Many in house logistics companies are enlisting the help of a 3PL to provide for advice about the best way to move forward. Companies should know it’s okay to ask for help and use what is available to you with the aid of a 3PL partner.
It’s hard to say how long the effects on 3PL and the supply chain will last. If you think of a machine running on gears, when one gear stops or slows down, the whole machine will stop or slow down. If one gear isn’t functioning well, the whole machine will suffer for it. 3PL is just one gear in the machine of the supply chain, but all areas will feel the effects. Here at American Manufacturing Solutions, we are doing our best to provide just that... solutions in a hard time. It is our goal to keep the gears pushing forward. Contact Us Today to find out how we can help!