Adapting to Global Supply Chain Disruptions
How MIMO is adapting to Global Supply Chain disruptions
Since early 2020 when the World Health Organisation (WHO) declared COVID-19 a pandemic, countries across the globe went into border closures to curb the spread of the outbreak. This has led to ripple-effect disruptions in supply chain operations, logistics, and transportation industries.
Despite these delays in the movement, storage, and flow of goods, MIMO has swiftly adapted and turned to alternative sources for components to promptly deliver our first batch of scooters to customers.
COVID-19 Impacts on Global Retail Supply Chain
During the holiday seasons in America in the fourth quarter of 2020, the National Retail Federation (NRF) reported that online retail sales increased by an astonishing 8.3% as compared to the same period in 2019.
This was attributed to the limited access to travel, restaurants, and shows among Americans; thus physical items were one of the few ways to spend their discretionary income. More goods than ever were coming from factories in Asia - at the Los Angeles-Long Beach Ports, which imports to the US have to pass through, retail imports from Asia saw a 16.9% year-over-year jump in the second half of 2020 alone.
Los Angeles-Long Beach Ports made a record of 13.3% increase in the volume of Asia Imports in 2020 compared to 2019
Before the pandemic, these ships in the US will usually dock for a few days before bringing the containers back to various parts of Asia. However, as of today, tons of ships dock at the US ports for weeks before heading back, resulting in double the shipping time of goods coming to Asia.
On top of the massive increase in sales during the holiday seasons in America, many countries around the world purchased masks, personal protective equipment, and hand sanitizers during the pandemic, which were all imported from China. However, due to the destination countries’ lockdowns, goods that needed to be exported experienced shipping delays. It was found that in US, for every 100 containers that ware imported into the US, only 40 are exported.
As a result of these factors, regional shortages of containers have led to the steep increase in shipping rates. According to South China Morning Post (SCMP), ocean freight fees are three to five times higher in June 2021 as compared to June 2020. Before the pandemic, the cost of moving a 40-foot sea container from China to Dubai is usually less than US$1,000, but now costs approximately US$5,000.
Not the same worrying situation for MIMO
Unfortunately, the automobile industry was not spared from the global shortage of shipping containers. Production lines of micro-mobility companies were similarly hit by the delay of automotive components, metal parts, and battery cells etc. This situation is further exacerbated by the fact that a large majority of companies in the micro-mobility industry depend on China to manufacture the parts and components for their vehicles.
Additionally, according to SCMP, stockpiling of microchips by one of China’s telecommunications behemoth, Huawei Technologies Co, began in 2019 and continued in the next two consecutive years during the pandemic. Huawei alongside with other Chinese technological conglomerates, did so in a bid to aggressively roll out 5G smartphones and to protect itself from trade sanctions by the US.
According to Gartner analysts, the worldwide semiconductor shortage will carry on through 2021, and is expected to recover to normal levels only by the second quarter of 2022.
Fortunately, since the first few months of the pandemic, MIMO has been reaching out to alternative reliable suppliers as well as actively sourcing for close substitutes for some of our affected components so as to avoid shortages and disappointment to our customers.
Rest assured, our e-scooters will be delivered as quickly as promised to our customers in the next few months, as quickly as possible.
Written by Kellina Loo.