While offshoring manufacturing did increase profitability for companies by lowering prices, we are now learning the long-term high price of doing so.

According to American Shipper, there are not enough containers in the right places to carry the world’s cargoes. The hope was that Chinese container factories would shift into ultra-high gear — that the industry would build its way out of the equipment crisis.

It hasn’t happened.

In fact, Chinese factories are intentionally not going into their highest gear, according to Tim Page, interim president and CEO of container-equipment lessor CAI International. Instead, they are managing output to keep prices high.

“What’s happening now [with equipment shortages] is exactly the same scenario we saw in 2010 after the financial crisis,” explained Lars Jensen of SeaIntelligence Consulting during a webinar in late January.

“If you look at 2010, they went on a building spree,” recalled Jensen. “It took about three months from when the problem arose to when it was resolved. If we put that in the context we have now, this should be resolved by Chinese New Year.”

Once again, we sees the benefits of domestic manufacturing when crises hit, and those companies who at least partially manufacture domestically have a long-term advantage.

Have a look at the article HERE for more details.

#supplychain #shipping #logistics #manufacturing #madeinusa