Chips, Ships, and Office Technology Tips: Why Your Copier's Delivery is Delayed
If you’ve ordered a new copier in the past month (or perhaps even two), you’re probably waiting for it right now.
But don’t worry — you’re not missing out, because everyone is experiencing the same problem. And, to be more precise, there’s actually two problems responsible for your copier’s delay: a chip shortage, and a global supply chain back-up in a scale never seen before.
If you’re reading this on a computer (I can’t think of how else you would read it, unless you’re a wizard), there is a very high chance the chip that it runs on was made in Taiwan. How can we make a claim like this with such certainty?
Because Taiwan is responsible for 63% of all microchip processors manufactured globally. In fact, 54% of the entire world’s supply of microchips are produced by Taiwan Semiconductor Manufacturing Company (TSMC), and 7% are manufactured by United Microelectronics Corporation (UMC).
After Taiwan, South Korea’s Samsung and DB HiTek are responsible for 18% of microchips produced, and China’s Semiconductor Manufacturing International Corporation (SMIC) and HHGrace make up 6% of the global microchip supply.
Added up, Asia produces a whopping 87% of all microchips used across the world. The vast majority of which comes from Taiwan, exasperated by the fact that TSMC is one of only two microchip factories in the world capable of producing top-of-the-line 5 nanometer microchips.
You probably already see the problem.
Remember when we all went home because of the pandemic? The same thing happened in Taiwan. TSMC, like almost all businesses across the entire world, were forced to cut down on their production.
Across the world, almost instantly, demand for microchips skyrocketed. This meant the chip factories were required to produce more product with less workers, and in a simple supply and demand scenario, maintaining the level of production needed to meet demand was impossible.
This is where the snowball quickly becomes an avalanche. Taiwan’s ports were also working on skeleton crews, just like the container ships pulling up to their docks. Initially, at the very beginning of the pandemic, global shipping cut back dramatically — but demand for shipping soon surpassed pre-pandemic levels.
That short reduction in shipping had taken ships out of the equation, however. And some of those ships still haven’t been made active since.
Moving across the most vast expanse of water in the world, the Port of Los Angeles and Long Beach Port (two of the largest ports in the US) were facing the exact same problem as Taiwan: a forced reduction in workers.
To make up for the reduction in ships, containers were being stacked higher, which in turn meant longshoremen spent longer unloading each ship.
The Port of Los Angeles, pre-COVID, unloaded ten ships every day. Now, on average, that same port unloads 15 ships per day. That’s a 50% increase in productivity, with a reduced workforce, unloading more freight per ship.
While that productivity boost is an impressive effort on part from the longshoremen, it’s not enough. Every single day, 30 more ships wait for their turn to be one of the 15 unloaded the next day.
Unfortunately, the avalanche is still headed down the mountain.
Because ships were taking longer to unload, trucks waiting to pick up freight found themselves sitting in lines. Lines that were so long drivers would spend an entire shift waiting, only to have to turn back empty-handed.
This meant retailers were forced to delay products. Which led to a reduction in profits. Which, in turn, was compounded by a sharp increase in shipping costs. Remember how ships were stacking containers higher and higher?
Well, there’s only so much freight one ship can carry, making space a highly valuable commodity. A single ton of freight went from costing $1,800 to $3,600, and the space retailers bought wasn’t guaranteed.
To make matters even worse, if a retailer gave up their spot due to price gouging or unreliable shipping times, they lost their place in line, and would be forced to wait for the next available space on a ship, which wasn’t guaranteed, and would most likely be delayed, and would cost up to four times what it was originally worth.
A COVID TIDE SLOWS ALL BOATS
You may have noticed international shipping rates going up across the board. That’s because this global shipping kerfuffle isn’t just affecting copiers. From shoes, to phones, to food and PS5s, everything is caught in the quagmire that is the microchip shortage and global shipping right now.
Civilization tends to be optimistic, and shipping experts originally believed these delays would begin to resolve themselves in the summer of 2021. However, you may have noticed that it is currently late in the summer of 2021, and the delays are still here.
These delays are now projected to be resolved sometime in 2022. With Delta running rampant across the world, and new variants introducing themselves every month, these delays could stretch for even longer.
PLANNING FOR THE FUTURE
So, what are we doing about it? Well, the US, like China, is focused on creating more domestic microchip factories. The US already produces 13% of microchips globally, but that percentage is completely incapable of meeting chip demand in America and the rest of the Western hemisphere.
While this is great, it’ll be great a few years from now. Microchips are some of the most advanced manufacturing processes we are capable of, and factories take years to build, and then get running, and finally achieve certification.
Realistically, this means US production of microchips won’t truly ramp up until somewhere around 2024. So, if you’re waiting for a copier you ordered two months ago, and you are on a 36 month lease, your lease could end before the microchip shortage.
What this means is that planning ahead has never been as important as it is right now. If you have a lease coming to term in the next six months, or even a year, it’s prudent to start considering copier options now.
No matter what brand of copier you purchase or lease — Canon, Konica Minolta, Kyocera, Xerox, HP — every manufacturer is facing the same delays.
JUST IN TIME
So, who’s to blame? Is it the consumers who, after being forced to stay in their homes, and after receiving stimulus checks, decided to stimulate the economy by purchasing devices that use microchips? Is it the labor shortage caused by stagnating wages and a pandemic that forcefully reduced the available workforce? Is it the microchip companies that didn’t foresee the growing demand for devices? Or, is it the shipping industry’s failure to meet shipping demand?
Unfortunately, no one company, industry, or segment of the economy can shoulder the blame for the delays every business is facing. All of this is, quite frankly, unprecedented. Companies like Ford and Chevy are delaying shipments and temporarily shutting down factories as cars, fully built, wait for microchips.
Tech giants like Apple and Microsoft are purchasing huge swaths of the microchips available, but even those aren’t enough. The iPhone 12, which was launched in October of 2020, was delayed. The 13 is scheduled to ship the third week of September, but that doesn’t mean buyers will get their hands on them anytime soon.
For now, the delays are becoming so prevalent some businesses are considering switching away from Just In Time shipping. A shipping model started by Japanese businesses in the 1970s, Just In Time shipping does what its namesake suggests: businesses only have in their inventory what they need, when they need it.
This system saves inventory space, keeps product moving, and reduces waste. But, while it does maximize profits, it is the opposite of resilience. Introduce one bottleneck to the system, and everything slows down.
In a situation like today — where the entire system, from manufacturing raw products, to shipping to the consumer is delayed — there is very little ability for Just In Time shipping to catch up, or prevent itself from falling further behind.
So, when will it end? We truly don’t know. But for now, the best thing any business can do is plan ahead.