If you are a regular reader of my column (thank you, by the way!), you know that COVID caused a massive disruption in the supply chain for most global industries. According to Accenture, one of the leading multi-national strategic consulting organizations, "94% of Fortune 1000 companies are seeing supply chain disruptions from COVID-19; 75% of companies have had negative or strongly negative impacts on their businesses."
Although many parts of North America are beginning to re-open, many areas and economies are still in lockdown. In addition, most of the new health and safety guidelines still require a reduced workforce at one time.The bottom line is that everything has and continues to run at a snail's pace.
Companies that manufacture within Mexico are impacted since many of the raw goods are imported. No fabrics, no nuts and bolts, no foam, no wood means delays on the assembly line. What might have taken four weeks to order and receive in pre-COVID times can take four to five months, if not longer.
In addition to long wait times, economists predict that consumers in North America can expect a massive increase in retail prices by this fall. This price increase will also happen in Mexico.
Mexico's primary imports are consumer goods (already manufactured) and parts and materials needed by industries that manufacture items. The total amount Mexico imports from the United States and China is staggering. From the United States, it was an estimated $168 billion in 2020, and from China, an estimated $74 billion. Regardless of whether consumer or raw goods, all this trade requires shipping containers.
When COVID began, shipping companies reduced or halted much of their cargo fleet. In addition to a drastic reduction in overall traffic, the empty shipping containers were not collected and shipped back. Generally, the containers are emptied and then refilled and returned to their original point. With COVID and reduced trade, they were left at docks and endpoints.
China, the first country to face the COVID shutdown, was also the first to restart its import and export. Unfortunately, most of the world's shipping containers are now empty and stacking up in North American ports.
At port terminals, reduced staffing is also causing delays and contributing to the shortage of returning shipping containers to the far east. There is currently a staggering backlog of cargo ships at every terminal in North America, awaiting approval to dock and unload. More shipping containers are going nowhere.
With the demand for goods so high, shipping costs, including the cost of space on cargo ships and containers, have skyrocketed. It is unprecedented in history. Compared to the cost pre-COVID, shipping and containers costs at least 5 to 10 x more right now. Many companies are already either increasing their retail prices to offset these added costs. Small to mid-size businesses face making no margin unless they raise their prices. Raising their retail prices so they are 5 to 10 times higher to cover the increased shipping costs is the only option.For anyone who has purchased a new home in Puerto Vallarta, or if you were planning on buying furniture or large items when you get here later this year, take heed. Buy now. Unless a miracle happens, be prepared to pay significantly more shortly. This includes any furniture either imported or made right here in Mexico.
Want to purchase furniture right the first time for your home in Vallarta? We specialize in helping you find the manufacturers and suppliers that use the correct materials with the proper processes. Visit us at our Puerto Vallarta store: 363A Constitucion just off of Basilio Badillo (Open Mon through Fri 10 to 2). Our Bucerias store is at Heroes de Nacozari 126 (Open Mon through Sat 10 to 2). If you are not currently in Mexico, email us at firstname.lastname@example.org or Whatsapp us at +3221365156 and join our Facebook Group: Mexico Furniture and Décor for ideas and inspiration.