COVID-19 has affected the world in many ways. One of the lingering challenges is understanding how supply and demand disrupted the natural order of ocean freight. Legacy Manufacturing is a Marion company and maker of Flexzilla® extreme performance water and air hoses. The company relies on routine and consistent parts shipments from around the world to produce their products.

“When we entered the lock down, there was a big slowdown in activity and recovery didn’t kick in until mid-Summer,” said Corbin Mollman, Sales Manager at Legacy Manufacturing. Mollman explained the domino effect on their planning and forecasting by adding, “The number of port laborers was drastically decreased which slowed the speed of cargo handling. With ports shutting down, the shipping industry reduced their total number of vessels, reducing the total number of routes.”

Routes were decreased to stabilize ocean freight costs and protect the profit margins of shippers. China was the first country to resume production, causing a quick increase to Chinese product demand. With China the only country producing, many companies rerouted additional production to China. China is already a country with a lot of exports and the added demands and limited vessel space created a backlog of work.  

“We’re seeing times where our container has been booked but in the eleventh hour it’s getting leap frogged by another container that they deem more profitable or sensible. Our container then goes back to the plant and gets rerouted for a future delivery. A typical lead time is 90 days and now we’re looking at another 30 days,” shared Mollman.

Containers coming to North America arrive at a port that is typically congested. Trucks that move product inland are now taking up to three weeks for delivery due to COVID restrictions. That delivery used to happen in 1-3 days.

“Ports around the world are congested and where there’s demand for containers, there’s none. The process for making more containers is so slow they can’t keep up.  Because of this unprecedented demand containers are being shipped back empty, bypassing a lot of exports” said Mollman.

The team at Legacy Manufacturing has relied on keeping communication lines open, and ensuring customers are aware of what they are experiencing.

“It’s the perfect storm,” lamented Mollman. “Most often, retailers are preparing for Christmas in September and these very extended wait times have required creativity.“

Mollman shared that because of quarantine requirements and social distancing, it has created a big increase for day-to-day items such as food, personal protective equipment (PPE), exercise equipment, and home office supplies that are all primarily from China. Shipping rates have double, tripled, and even quadrupled.

Luckily, Legacy had a surplus of supplies they are able to work with. “Towards the end of 2020 we booked our garden hoses for the full year and a lot of it’s already here or in the que, but for any additional demand we would have to keep up with that growth pattern. It’s not ideal but we’re better off than others,” said Mollman.

During a time without answers, the team at Legacy knows that breaking down any internal silos of communication was important and the maintain routine daily meetings, “it’s been a learning curve and every day there is something new to learn,” said Mollman. “We know we can react quickly to a changing situation.”

As much of the business landscape of 2020 continues into 2021, one thing is for sure: the team at Legacy will continue to roll with the punches in hopes of improvements in export logistics.  

Marion Economic Development Corporation exists to be economic development thought leaders who drive competitive advantage for Marion. Competitive advantage takes partnerships. We want to tell your investor story, contact MEDCO to get started. Learn more about Legacy Manufacturing.