Blog Archives

China’s “New Normal”: Managing Manufacturing & Supply Chain Expectations for 2023

January 2023

On the heels of China abandoning their “Zero Covid” policy, businesses and investors are expecting a surge of Covid cases that will likely cause manufacturing and supply chain disruptions in the first half of the year, if not longer. Savvy businesses will make moves to mitigate the impact of these issues, but it’s not all bad news, as we will explore here.

The two major factors that will have the greatest impact are labor shortages and disruption in logistics.

For the workforce, the challenges come in the form of a spike in Covid cases leading to lost hours availability and technology implementation which could be more difficult to institute with skilled workers to install and maintain this technology being in shorter supply.

When it comes to logistics, trans-pacific trade has evolved to address the impact of Covid in general. The global supply chain shifted from “just in time” logistics and instead implemented “just in case” logistics. This has lead to an industry-wide scramble to obtain warehousing stateside, thereby adding cost. In addition to this, we can expect higher freight pricing and extended timeframes.

To stay ahead of potential supply chain disruptions, companies should explore these three options:

1. Inventory materials and plan ahead. Whether that’s stockpiling raw materials or key components, having greater-than-usual stock on-hand can make the difference when it comes to keeping manufacturing online.
2. Identify alternative suppliers. Doing this work in advance and having “Plan B” conversations can help grease the skids if your primary supplier hits a roadblock.
3. Invest in technology. Simply put, automation, while not an antidote, can have a significant impact on mitigating the effects of the unknown.

Is China’s delayed pandemic too hot to handle for your business? If so, relocating some or all of your production to Vietnam can be a viable alternative. Due to their proximity to China, affordable workforce and well-developed trade agreements, many are finding this option attractive.

So what is the good news, you ask? There are reasons for optimism in the future, taking the form of relaxed travel and quarantine restrictions, allowing for the exploration of new partners that has been limited since the Pandemic began, and, perhaps best of all, lower cost of doing business with expected moves such as tax breaks, government incentives, and free trade agreements.

Though the situation isn’t without its challenges, if the last few years have taught us anything, it’s that business keeps moving, and PGL is here to keep your business moving. Visit ShipPGL.com, and let us help you find peace of mind with your logistics and supply chain concerns.

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Supply Chain Industry Insights

December 2022

By Tim Gundlach

In the United States the biggest concern for November was the possibility of a rail strike on the West Coast. As a result, most ocean cargo was diverted to the Gulf and East Coasts. This shift helped clear the port & rail congestion issues for the West Coast ports and inland rail yards, but shifted those issues to the Gulf and East Coasts. To add to challenges on the East Coast, on November 10th, a late-season tropical storm increased in strength and became Hurricane Nicole. The hurricane made landfall near Vero Beach, Florida then made its way up the East Coast impacting the ports of Miami, Tampa Bay, Jacksonville, Savannah, and Charleston before weakening into a tropical storm and heading back into the Atlantic Ocean.

Simultaneously, the world’s economy continued to slow with steamship lines & airlines pulling capacity from Transpacific routes. The reduction in demand outpaced the reduction in capacity which resulted in a continuous drop in rates for both air and ocean transportation. The increase in blank sailings then began to manifest itself in other ways, like ports becoming clogged with empty shipping containers. The Port of New York and New Jersey were forced to threaten ocean carriers with potential penalties to accelerate the removal of the empty containers which numbered as high as 200,000 in July of 2022.

On November 14th, the Australian supply chain became an area of focus as the nation’s largest tug-boat operator planned a crew lockout over a bitter 3 year pay dispute. This planned lockout would have prevented harbor-towage employees from working, and would result in disruption of operations at 17 ports across Australia. On November 17th, Australia’s Fair Work Commission announced that the lockout would not proceed as planned.

In northwest China, a deadly fire led to the death of 10 people due to “zero-Covid” lockdown measures. Protests spread to major metropolises across China. On Dec 3, it was announced that there would be an easing of testing and quarantine rules.

In Korea, On November 23rd trucker unions began a nationwide walkout causing estimated daily losses of about $224 million USD. This is the second major strike in less than 6 months by thousands of truckers demanding better pay & improved working conditions. On November 29th, the South Korean Govt took the unprecedented step of involving tough strike-busting laws after failing to reach a deal with unions. This marks the first time that a South Korean administration issued an order to force transport workers back to their jobs. As of December 5th, the strike organizers said that they would defy the order.

Back in the US, the rail strike was delayed by the Brotherhood of Maintenance Way, pushing it back to early December. Meanwhile, more than 400 business groups joined in pleading with Congressional leaders for quick action. Although President Biden and Democrats had been unwilling to block a strike in September, this time they felt that they had no choice but to act. As of December 5th, Congress is introducing legislation to keep workers on the job.

Here is what we can expect as we enter December:

1. We expect continued slow demand to continue with flat or declining rates until early January when there may be slightly higher demand due to the Lunar New Year which will take place on January 22, 2023.
2. Various labor issues are likely to continue in parts of the globe.
3. In China, although there is some easing of the zero-Covid policy, the next few weeks could be difficult for the Chinese economy. With the significant risk during the winter months just prior to the Lunar New Year Holiday, further restrictions would probably be imposed nationwide again impacting manufacturing and cargo transportation.
4. Transportation related issues due to the Ukraine conflict remain unchanged.

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PGL Crating Tips with Sean Connolly

November 2022

Here’s a PGL Crating Tip: be as specific as possible!

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Supply Chain Industry Insights

November 2022

By Tim Gundlach

The effects of the Covid-19 pandemic continue to be felt in the global supply chain. As a result of unpredictable sourcing and transit times, the reliability of traditional “Non-peak” and “Peak” seasons in logistics is no longer applied. The global supply chain shifted from “just in time” logistics and instead implemented “just in case” logistics. The end result is warehouses becoming choked with products in preparation of the upcoming holiday season.

Suddenly the world which could not move products fast enough just as quickly faces a dramatic drop off in global demand due to global inflation and recession concerns as well as concern of escalation of the conflict in Ukraine.

The most recent concern in the United States was the potential for longshoreman and rail strikes. This routed cargo away from the West Coast, sailing to alternative ports on the Gulf and East Coasts. This influx of containers created berthing delays and port congestion in those areas. As of this video, US rail and labor unions are threatening a strike as early as Nov 19th, 2022.

So what’s next?

The short answer is nobody knows for certain… and it depends on how issues shape up on topics like West Coast port labor fights, Gulf and East Coast port congestion and the geopolitical arena with regard to the world economy, energy shortages in Europe, and the state of conflict in Ukraine.

Overall, we are confident about a few things going into November: (1) Ocean and air rates should remain flat or decline in the next month (2) The US Govt cannot allow labor strikes to occur as it would be detrimental to the US Economy (3) Port congestion and chassis issues should improve in time. (fingers crossed)

As always, PGL remains available to discuss particular needs and-or concerns at any time, in our continuing effort to assist in mitigating risk to our partners.

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Tim Gundlach, PGL’s Trade Lane Manager for the Asia-Pacific region, breaks down the 2021 supply chain crisis and how it has affected the global supply chain and logistics industry.

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For more information, call 833-SHIP-PGL

For more information, call 833-SHIP-PGL

Nothing exemplifies the challenges involved in the shipping and logistics of large, sensitive equipment better than the crating and delivery of aircraft simulators. All flight simulator moves start with a detailed bid that covers the steps and expenses necessary to accomplish a move of this nature. The extensive experience that PGL has in moving this type of equipment leads to a comprehensive bid that includes the communication and visibility that is so crucial to successful delivery. Once on the job, PGL can supply the rigging equipment to the site along with the operators and credentials necessary to perform in a controlled environment for the crating and loading processes. Crating begins with engineer consultation to create a fully-customized solution that is unique for each aircraft. Special attention is paid to load limitations for both width and height, as well as accommodations for these sensitive parts. Everything is tightly packed to avoid shifting, and heat wrapped in a 32 mil poly to prevent moisture intrusion. Everything is tarped rail-to-rail with no exposed marine wrap to keep the avionics safe. Throughout the process, PGL keeps you informed every step of the way. For international moves, our partnership with TALA, The Aerospace Logistics Alliance, offers the transparency and peace of mind necessary for the task. From rigging and crating in a controlled airport environment, to successful delivery, PGL has the experience to go beyond 3PL with full-service delivery on a global scale.

For more information, call 833 Ship PGL

Going beyond traditional shipping and logistics, PGL is your partner for full-service delivery and execution. In conjunction with our overseas partner, we moved 6 crates of aircraft seats from the UK to the US for exhibition. Via air freight, we cleared the shipment through US customs, collected crates with a box truck at DFW International Airport and delivered to our Dallas warehouse. A hot shot box van was then loaded and delivered to the final exhibition space. Once arrived at the destination, our White Glove service team set up the show room and removed the empty crates for storage. After the event, the original crates were returned to the floor, the display dismantled and the seats were repackaged. The freight was tendered back to the airline at DFW for the trip back to the United Kingdom where it was cleared through customs and returned to the customer. From Europe to Texas via air and land, to the careful uncrating, setup and re-crating and trip home, PGL has the experience to go beyond 3PL with full-service delivery on a global scale.

For more information, call 833-SHIP-PGL

Starting in April 2020, PGL was honored to partner with the Red Cross in the new NYC Healthcare Heroes initiative, assisting in the distribution of over 100,000 bags of food, household supplies and over the counter medicine to the city’s brave healthcare professionals. This effort included delivery to 63 New York hospitals over the course of 2 months. 110 vehicles were used, leading to final mile deliveries to all 5 boroughs in NYC from Philadelphia arriving by 6:00am for distribution. As with any project of this magnitude, communication with our partners was critical. With the help of Aramark and FruitGuys, coupled with the passionate Red Cross volunteers, we were able to accomplish this monumental task. PGL is proud to leverage the technology and people that help our clients move their business forward to assist the Healthcare Heroes that are working so hard to see us through the Covid-19 Pandemic. Let’s move forward, together.