With the holiday season around the corner and supply disruptions continuing, we thought we should update you on the situation and how we are managing through the various challenges. As many of you already know, we had hoped that 2021 would be the year where things would go back to normal after Covid. Alas, worldwide problems continue and for those of you not following all the details, here is an overview of the situation:
Vessel space: Because of the severe disruptions and the staggered way in which the world tackled Covid lockdowns, shipping lines scrambled to be at the right ports at the right time. Some were stranded at ports while others were re-directed to new destinations. Some improvement has been seen but overall, there are still fewer vessels plying the ocean.
Container shortage: The vessel shortage and reduced business worldwide led to container shortages. Factory closures and lockdowns had a ripple effect which reduced imports. China and Asia recovered first which resulted in vessels heading out to Europe and North America but not returning quickly enough to make those containers available again. Limited workers and a backlog of containers created a further imbalance. The price of a container from SouthEast Asia to U.S. has increased from $4000 to $15,000 and more. Prices which previous included cost of freight and insurance are now being quoted as Freight Collect.
Port congestion: There are still port closures and severe congestion at major ports. Xiamen, a major port in southeast China, recently had an extended closure because of Covid. Los Angeles port is considering 24-hour service to try to alleviate the significant congestion. Los Angeles and Long Beach ports in California handle 40% of all cargo containers entering the U.S. On recent days, as many as 60-70 ships were stuck in the channels outside the ports. Already, the port of Los Angeles has handled 30% more cargo this year and this is before the busy holiday season.
Truckers: Another problem facing all of us is the decrease in truck drivers and trucks. Not only are they in high demand to carry cargo cross country because of greater online delivery demand but they are also used to collect cargo from each port to the various warehouses thus creating greater demand for an already scarce resource. Added to this is a cruel joke at many ports – the allowance for Free Days to collect cargo has been reduced at some locations from 4 days to just 1 resulting in high demurrage fees.
Product availability: Our overseas suppliers have all but given up trying to manufacture small-batch premium products. They have opted to focus on higher volume products to optimize capacity on the few vessels available to them. We have been forced to place more products as Out of Stock than ever before and for some we have no ETA to offer. We have also had to consolidate varieties and where before we were able to offer many grades of a specific tea, e.g., Yunnan, Gunpowder, Assam, we are now restricted to offering you what we have. Sometimes, we have had to change our formulas to use a different tea. Our Earl Grey blends have always used a stylish long-leaf black tea. Our container with this tea has been stuck at various ports for over 6 weeks and we have had to use a smaller sized leaf for the blends.
Herbs and Botanicals: We have suspended offering these for bulk wholesale and are using the small batches we can procure for our blends. Herbs and Botanicals have increased dramatically in price and the quality is inconsistent from lot to lot, thereby making it difficult to offer them to you. And for a few products, the increased delays at ports, and more frequent inspections and holds, have resulted in product spoilage.
Through all this, we are very grateful to still have a business that has remained open during Covid, even though our catalogue may be constantly changing and evolving. Thank you for your patience and loyalty.