By Timothy Aeppel

(Reuters) – Through most of the pandemic, Kent International, Inc couldn’t import enough Chinese-made bicycles to supply Walmart (NYSE:) Inc and its other big U.S. retail customers.

The New Jersey-based manufacturer and wholesaler has built up a good buffer. It now holds a 10 week supply in its warehouses in California and South Carolina, as opposed to four to six weeks before COVID. The company appreciates this buffer, as a result of the rising number of COVID cases in China and new shutdowns worldwide.

Arnold Kamler, CEO of the company stated that “the supply chain for bicycles is now in sync.”

Many U.S. businesses are currently in the same situation. In recent months, inventory levels rose as U.S. port congestion has eased and supply chain problems have started to untangle.

According to Commerce Department figures, wholesale inventories jumped 19.9% year-on-year in February according to Thursday’s release. These inventories were 2.5% higher than January.

Economists expect inventories to continue their upward trend, because inflation-adjusted inventory levels remain lower than they were before the pandemic. Also, inventory-to sales ratios remain low.

China’s recent shutdown poses a challenge. This is slowing down traffic and ports as well as stranding workers at factories. These interruptions have a significant impact on global supply chain for goods, including electric cars and iPhones.

Don DiCostanzo is the chief executive officer of Pedego Electric Bikes. He said he began adding inventories a whole year ago, and that he opened a second warehouse near his California office to store excess.

He said, “We have it all.” We have problems with our incoming inventory, Shanghai being shut down for one month. As the company enters its busy summer season, this could lead to shortages. It also means Pedego will have to delay the launch of a new product planned for June, because those bikes won’t make it on time.

‘A MORE NORMAL CYCLE’

Some companies have built up inventories with an eye on grabbing market share from competitors who didn’t move as fast to refill shelves.

Automatic Pool, NASDAQ:) Covers, Inc, Indiana, now has three times the inventory it had before the pandemic.

Michael Shebek is the CEO of the company. He said that he had been able to achieve this by increasing the number and quality of the suppliers from which he received materials. Although the need for more pools is decreasing, he said that it appears they are still in high demand. Businesses selling items that made life easier for people in quarantines soared during the pandemic.

For now, Shebek said having extra inventory has given him “a competitive advantage over those who don’t have it.”

Kamler, the CEO of Kent, said last year he was “scrambling for bicycles like they were gold – but now, we’re in a more normal cycle.”

He has lost the Chinese supplier of most his Kunshan bicycles, which is near Shanghai. Whether that eventually causes another round of shortages for him depends on how long the halt lasts, he said, noting that with the fatter inventories he now holds, it shouldn’t be a problem unless it goes on longer than a month.

To be sure, there’s a dark side to holding all those goods. Kamler said, “The cash problem is the issue nobody talks about.”

He estimates that he’s now paying U.S. Customs $4 million to $5 million a month in duties on his imported bikes. A South Carolina factory that produces bikes is also owned by him. However, it heavily relies on Chinese components that are subject to tariffs. This cost is recovered when he ships products to retailers. However, he must carry inventory for longer periods to recover the additional cost.

It is still a problem that ocean freight costs are higher than they were during the pandemic.

Kamler stated that he had paid $2,000 for a container to be shipped from China to his U.S. warehouses before the pandemic. Just recently, Kamler received notification from his shipper that the container rate would increase to $9,000.