PPB October 2021

frustrating and all too common, but this is a problem that is equally maddening for suppliers. How did the industry get to this point? Simply put, the shortages and delays experienced on both sides are the residual business effects of the COVID-19 pandemic. The situation started with a shortage of factory workers in China and in factories around the world that produce raw materials, components and finished products, coupled with an increase in shipping costs for imported materials and products. The transportation issue was exacerbated due to the scarcity and cost of shipping containers, available space on ships and a shortage of dock workers to unload the ships once they got to the U.S. ports. The unavailability of raw materials along with higher prices that had to be passed on to suppliers, rising labor costs and the weakening of the U.S. dollar against the Chinese yuan, combined with an increased demand for products as businesses restarted and venues reopened, created the perfect storm. The trickle-down effect of these scenarios has rocked most industries— including the promo industry— for months. “The pandemic disruption caused a ripple effect from materials, components and labor to production shortages that are now felt all over the globe,” says Nadira Bakar, East Coast region manager for Houston, Texas-based KTI Express, a supplier that manufacturers and imports tech-related promo products. “This has especially impacted promo with longer production times, fragmented ocean shipment imports/exports and longer transit times over air freight. In addition, since air freight is overwhelmed, there is an added layer of delay for items to leave China.” Dan Strickland, owner of Panama City, Florida-based supplier Garment Gear, a screenprint and direct-to-garment print company, explains the issue from a slightly different perspective. “With t-shirts, so many mills shifted production to masks and then, like so many other industries, they were forced to close or only run at partial capacity for weeks on end. Since everything has become “just-in-time” production, these ripples in the supply chain have become full-blown tsunamis of problems stacked upon each other.” Mark Jenkins, MAS+, managing director of promotional markets at supplier Pioneer Balloon Company, says shipping delays via ocean have always been complicated and slow to respond and correct. “The epic interruption in the chain of supply (decreased demand and supply) exacerbated the inherent problems in shipping by sea. It will take time to stabilize this very slow system,” he says. But how long? Most suppliers interviewed say it will take at least a year and likely up to three years for the system to unwind and reset. “I’d like to believe that when COVID cases decrease and the world at large is back to some sense of normalcy, these issues will resolve themselves,” says Amie Hoff, CEO of supplier FitKit Wellness in Grasonville, Maryland. “It’s hard to tell, but I hope by the end of 2022 we will see things subside.” KTI’s Bakar says because the ripple effect is bigger than anticipated and because of the global scale, the timing is hard to gauge, but her educated guess is that it will take 18-26 months to be resolved. “This guess is Nadira Bakar Dan Strickland Mark Jenkins, MAS+ Amie Hoff “The pandemic disruption caused a ripple effect frommaterials, components and labor to production shortages that are now felt all over the globe.” —Nadira Bakar East Coast regionmanager, KTI Express DIFSF[PGG 4IVUUFSTUPDL DPN FEATURE | The Supply Chain Crisis 42 | OCTOBER 2021 |