We could be on the verge of Covid causing more global supply chain issues around the world, and just for clarity, we are now in 2022, not 2020. China has implemented numerous zero-tolerance policies with regard to Covid outbreaks after the virus first ran rampant in 2020, and with new variations still appearing two years later they are taking no chances by putting snap lockdowns in place where covid cases are confirmed.
You may remember the problems that this caused back in 2020 with global supply chains effectively destroyed as manufacturing plants shut down around the globe and shipping channels stopped moving. Well, we could be on the verge of history repeating itself and business owners need to be prepared for that potential outcome.
China has recently put Shanghai into lockdown, to put that into perspective, Shanghai has a population of just under 25 million people which is more than the entire state of Florida. Shanghai is also the busiest trade port in the world and the global center for semiconductor manufacturing. I think you can see where this is going.
Covid Means Shanghai Is Shut To Global Trade
As mentioned Shanghai is the world’s busiest port, as it sits at the mouth of the Yangtze river which means a lot of China’s exports make their way to Shanghai or neighboring ports before heading around the world.
However, with close to 25 million people in strict lockdown around Shanghai, this is causing problems not only in factories and offices but also at the port itself. With no people around to load and unload ships, it is leading to a pretty sizable backlog.
To highlight this issue below you can see the current situation (as of 21st April 2022) of cargo ships around the US’ busiest port which is Los Angeles, and the busiest port in Europe, Rotterdam.
Now we can compare that to the current situation around Shanghai.
You can also see a similar problem further south outside of Ningbo-Zhoushan which is the third busiest global port and is only going to compound the problem for the global supply chain.
The Russia Ukraine Conflict Causing Supply Chain Issues For The Motor Industry
Covid also caused very well-known issues with the motor industry back in 2020 which are still being felt today with the new car market still failing to meet demand, which has resulted in the used car market seeing higher and higher prices.
Any hope of things returning to normal for the car industry is also looking slimmer by the day, not only due to the Covid issues continuing in China affecting the chip supply chain but also due to the ongoing conflict in Ukraine.
Ukraine is one of the largest global exporters of wiring harnesses for a lot of European and some American car manufacturers. The wiring harness is the part that is responsible for all of the electrics that run around the vehicle, and obviously, without them, manufacturing can not continue.
Similarly, with Russian sanctions, there is now going to be a further shortage of materials like Nickel which are increasingly used in electric vehicles.
This means that the motor industry is not set to “return to normal” any time soon, with supply chain issues looking set to continue.
What Does This Mean For US eCommerce Sellers?
In simple terms, this means that we are not out of the woods yet when it comes to the previous two years worth of disruption with the supply chain. But rather than dwell on the uncertainty and challenges, as entrepreneurs it is these moments where we focus on the opportunities that this presents.
eBay recently released a report on Recommerce and the patterns that they are seeing right now in the used and refurbished categories. Gen-Z is leading the way but other demographics are catching on to the trend too. Due to the supply chain issues we experienced in 2020, consumers are now much more familiar and comfortable with purchasing used products or looking for ways to repair existing items, rather than just replacing them.
This has led to whole businesses being born out of giving new life to used products, such as Tamara from eBay store Sneaker Solecial talking about how she found her opportunity in sneakers.
“I deep clean them and restore them to their original form, making sure each shoe is in the best condition and looking as new as possible. [Aiming to please customers while making a profit] has always been my mission.”Tamara Baker, eBay Seller & Business Owner, Sneaker Solecial
According to eBay the two biggest categories for Recommerce are Apparel and Tech, which should come as no surprise. If you are selling fast turnover products like fashion, then as items move with the seasons, what is old to someone, will be new to someone else. With tech, obviously, as inflation continues to rise and certain parts are harder to come by in some industries, replacing may now be out of the question, forcing consumers to look at the repair route instead.
The same applies to the automotive industry. With the supply chain issues causing a shortage and driving prices up in both the new and used car markets, more and more consumers are now looking to modify and repair their vehicles as opposed to just straight replacing them. This leaves a huge opportunity for a whole host of products that the market needs right now.
Made in The USA
Finally, one of the biggest draws right now, is items that are manufactured right here in the US. If you can find a way to build and create your products here, then the number of ships waiting at the port in Shanghai will have little impact on your business, along with any other potential supply chain issues.
This opens the door once again for handmade marketplaces like Etsy to really thrive due to Covid issues in the East and the conflict in Ukraine.
When you are aware of what is taking place on a global scale it gives you the opportunity to pivot your business and avoid any catastrophic impact before it is too late.
As business owners, it is your job to react to the market challenges accordingly and find new ways to thrive. Being ahead of the news and possible disruptions gives you the best opportunity to grow your business in what could have been troubling circumstances.
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