Supply Chain Management

West Coast Port Pileups Trickle Down to E-commerce Fulfillment Providers

By | Supply Chain Management

The number of container ships parked off the Los Angeles-Long Beach port complex now total over 70. The reasons for the delays in the cargo off-load process are numerous and include:

  • COVID-19 safety protocols add more time to off-loading.
  • Newer ships are two or three times larger than legacy platforms, and as a result, take longer to unload.
  • A post-pandemic consumer buying frenzy, driven by a recovering US economy, is resulting in increased e-commerce volume—outside of normal volume increases specific to the holiday shopping season.

Bloomberg is telling us that door-to-door ocean freight transit times from Asia to the US have increased by 43 percent. Those transit times are growing daily due to port driven off-load delays.  Freightos says that container-based transportation costs between the US and have increased five-fold year-over-year. Ponder that for a few seconds!

In addition, unrelated supply chain challenges are impacting all of us. These result in partially empty store shelves and shortages in automobiles, electronics, and construction products. The net outcome favors neither merchants nor consumers: both are paying more for consumer goods and waiting longer to receive them. The trickle-down of the port situation negatively impacts the primary component parts of the e-commerce supply chain.

E-commerce Supply Chain Challenges

Destination port delays are negatively impacting all parts of the e-commerce supply chain. Here’s how:

  • Origin ports will need to start delaying shipment of products to destination ports, driving additional supply chain backups.
  • Distribution from port warehouses to regional warehouses and national fulfillment centers is delayed via rail, truckload, and LTL modes.
  • Product shortages have delayed distribution from regional warehouses and DC’s to big-box stores, 3PL order fulfillment centers, and smaller, micro-fulfillment center delivery.
  • E-commerce consumers are realizing poorer product selection and increased back-order delays.

These conditions are creating backed-up consumer demand as we enter the holiday shopping season, the busiest time of the year.

Unrelated Challenges to Supply Chain Service Providers

Service providers and merchants are also having to deal with challenges unrelated to port delays.

  • High employee turnover
  • New worker shortages
  • Increased labor cost driven by worker shortages
  • COVID-19 safety protocols
  • Truck driver shortages resulting in trucking capacity limitations.
  • COVID-19 recovery driving increased consumer purchasing with limited carrier resources to support increased business.
  • Integrated parcel carriers walking away from marginally profitable e-commerce business and raising rates.

Impact on E-commerce Fulfillment

These e-commerce supply chain challenges that I have detailed, along with the trickle-down impact of port delays, have some e-commerce fulfillment service providers concerned about receiving an avalanche of product late in the holiday shipping season.

Typically, merchant warehouses and fulfillment centers receive much of their holiday season inventory during September and October. Port delays moving delivery of that inventory to November and December is a concern and fulfillment centers need to be planning for such an event right now.

Newegg Logistics Services (NLS) discussed with me how the company plans to manage the possibility of receiving high-volume new product late into the holiday-shipping season and still fulfilling outbound orders on time.

“Delivery appointments for receipt of inbound product are critically important so we can plan to have the resources in place to unload trailers and containers and place product into inventory,” says Alvin Chin, NLS senior business development manager.  “If we know in advance when the product is arriving—whether that is in September or November—we can manage almost any amount of product with no impact on our outbound fulfillment services.”

Newegg, which is headquartered outside of Los Angeles with several facilities across the region, has a geographical advantage in the current shipping climate. Chin adds: “We have a large fulfillment facility in Sothern California that is not exposed to transit time and line-haul delays once product has been unloaded at the port.”

Still, the situation outside of U.S. ports creates a tall order to fulfill up and down the supply chain. Geographic and technological advantages aside, if West Coast port delays can’t be addressed in the very near future, I anticipate that product availability and on-time delivery will be negatively impacted during the holiday-shipping- season.

The Great E-commerce Fulfillment Center Squeeze

By | Supply Chain Management

The pandemic has impacted nearly all parts of the global supply chain and e-commerce fulfillment is not immune to the condition.  Covid-19-driven consumer behavioral change has resulted in staggering e-commerce growth, which in turn, is putting tremendous pressure on e-commerce fulfillment centers (FCs).

The immediate impact has been FC demand almost exceeding capacity. The shortage of FCs is resulting in greater competition for limited capacity, which is driving increased rent. Labor and facility rent are the two most costly components of operating a fulfillment center.

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Putting the ROI in Robotics: Task-Specific Warehouse Automation

By | Supply Chain Management

Robotic fulfillment solutions are a hot topic right now. There are numerous YouTube videos out there demonstrating how merchandise racks are autonomously moving about in fulfillment centers, on the backs of tiny robotic transport vehicles. These robots are taking merchandise racks to their human counterparts for individual items to be picked, packed, and shipped.

Large merchants like Amazon would have you thinking that nearly all their fulfillment centers operate with robots that pick, pack, and ship their merchandise orders. However, that is not the case.  Human hands are still picking, packing, and shipping most e-commerce merchandise orders in both large and small fulfillment centers across America.

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The Evolving E-Commerce Value Proposition

By | Supply Chain Management

Online merchants, e-marketplaces,  parcel carriers, and technology advancements each impact the e-commerce value proposition. In simple terms, that value proposition is still based on an innovative service offering: one with multiple features and benefits that make e-commerce attractive to the consumer and drive purchasing behavior. Some of the primary components of that value proposition include:

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Micro Fulfillment: The Move to Same-Day and Next-Day Delivery

By | Supply Chain Management

Amazon continues to drive change in the e-commerce arena, aggressively growing their next-day, Prime delivery initiative. Today, it is nearly impossible for most e-commerce merchants to offer the combination of free-shipping and next-day delivery to most of the continental US, without compromising profit using costly Express delivery services. However, by 2022, Amazon is on track to support affordable next-day delivery to most US addresses and, today, offers the largest on-demand, same-day delivery network, Amazon Flex, in North America.

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Understanding the Market Conditions Behind Inventory Shortages

By | Supply Chain Management

Understanding the current market conditions sets your business up for growth. When market conditions surge in either direction, companies need to make sure they can keep up with trends and remain solvent in an evolving market. Inventory management remains crucial for both traditional and eCommerce businesses amid fluctuations in the economy and supply chains. A careful analysis of supply chain availability helps businesses predict and prevent inventory shortages during periods when supply does not meet the demands of consumers.

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Order Fulfillment Terminology & Fees

By | Supply Chain Management

The order fulfillment process includes all of the steps a company takes between receiving a new order and delivering it to the customer. An effective order fulfillment strategy is key to ensuring impeccable client service, which builds a good brand reputation for your e-commerce business. About 38% of online customers say that a negative delivery experience will deter them from shopping at that online store again. To prevent such an adverse outcome for your online business, you must manage and implement key steps in the order fulfillment process. Here are some important order fulfillment terms and related pricing.

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Order Fulfillment: What It Is and Why Getting It Right Is Essential for Your Business

By | Shipping, Supply Chain Management
Order fulfillment includes the entire process of receiving, processing, picking, packing and shipping orders to your customers. Without a good order fulfillment strategy in place, customers may never receive their product, or have the wrong items shipped. When either of these occurs, the likelihood of a customer choosing to continue using your company is slim. Understanding the processes and using them correctly for both in-house and e-commerce order fulfillment will help your business retain customers.

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Things That Could Go Wrong with In-House Fulfillment

By | Shipping, Supply Chain Management
Whether you run a small business or a large corporation, in-house fulfillment mistakes can happen. With the many moving parts that go into storing, packaging and shipping products to your customers, these processes offer plenty of room for error. While most orders ship out correctly, the ones that are delayed or even incorrect can have a major impact on your revenue and brand image, even if it something out of your control. From a traditional warehouse setting to e-commerce fulfillment services, the following mistakes can happen for a number of reasons. The key is knowing how to avoid them and keep your business running smoothly.

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What Should I Look for in a 3PL Provider?

By | Shipping, Supply Chain Management
Finding the right 3PL provider takes a lot of analysis and consideration. There are so many different options that it can be hard to know which one is the best one for your business, or will fulfill your current logistical needs, and can scale into the future. In this article, we cover some things that any online business can use to evaluate 3PL services and decide which one is best for their current fulfillment needs.

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