Girding for Supply Chain Turmoil in 2022
Despite the expectation that this year will be a difficult one regarding supply chain management, strategies exist to ease the burden.
Companies can minimize disruption by implementing specific tools and best practices that will enable clearing logistical, transportation, and technological hurdles. Those include modernizing your business’s supply chain management processes—adopting artificial intelligence, for instance—enhancing visibility within the logistics network, applying analytics, and expanding your carrier networks. Taking such steps will alleviate many of the disturbances that already have been plaguing shippers.
Challenges confronted during the recently concluded holiday season and last year’s fourth quarter that likely will persist include the COVID-19 Omicron variant; China’s responses to virus outbreaks; dwindling warehouse capacity; inflation; port backups, and worker shortages among dock employees, seafarers, and truckers.
A major driver of current domestic supply chain obstacles is the expansion of e-commerce purchases by American consumers. Worse, no simple solution exists to solve the supply chain worker shortage—a problem Omicron also is exacerbating.
Container ship arrival to ports of destination increasingly has become delayed. A record 109 vessels shortly after New Year’s Day waited to unload their cargo at the ports of Los Angeles and Long Beach, according to the Marine Exchange of Southern California. Shipments have overwhelmed ports and freight yards. Containers have arrived, but not enough hands are there to unload them.
Rising inflation isn’t helping either. Raw materials are just one group of goods whose prices have risen during the past several months. Consumer demand has outstripped many companies’ supply capabilities.
Many businesses are attempting to ease system stress by obtaining more warehouse space, but capacity is constrained. Adding distribution centers reduces transit distances, boosts the number of touch points, and eases final mile delivery. So little square footage remains to store freight that some have resorted to using drop trailers in parking lots.
The worker shortage and COVID have become the common denominators that span many of these problems. Those issues have come together in U.S. and Canadian mandates that bar unvaccinated truck drivers from crossing the border—potentially sidelining tens of thousands of truckers.
Southern California dockworkers continue to call in sick with coronavirus, and about 100 ships still remain in the queue for port unloading. The ports of Los Angeles and Long Beach reported a drop of 14% in combined inbound volume of imports in December compared to the year before.
President Biden in October directed federal officials to work with the ports of Los Angeles and Long Beach. Part of the effort included both ports moving to 24/7 service. But the reality is neither dock is working 24/7. Due to the difficulty of qualifying for an appointment and the lack of chassis appropriate for the freight, few trucks actually appear to complete overnight pickups.
Moreover, the administration’s plan, announced in November, to allocate $17 billion for upgrading U.S. ports will take years to be realized. And, the contract for Southern California’s dockworkers expires at the end of June. Failure to resolve the current labor dispute could result in further port disruption and a reduction in cargo movement.
Finally, the Chinese New Year once presaged an easing of supply chain pressures that would have allowed the port and trucking industries to catch up. Unfortunately, factory closures and Chinese port delays, combined with this month’s Winter Olympics in Beijing and the potential for power cuts to curb emissions mean manufacturers can’t predict output. So, it’s likely that no recovery time will exist to prepare for the next disturbance.
Still, there is no reason to despair. Solutions are available. A particularly effective one is to obtain software that organizes all your supply chain data in one centralized location. One that not only feeds you the data you need, but does so in an insightful way that empowers you to take action, addressing the many uncertainties out of your control.
An estimated 35% of shippers today are using a transportation management system. If you’re one of the remaining 65%, acquiring a TMS is a no-brainer to recoup inefficiency costs.
Other products in a TMS solution offer real-time insights, shipment transparency with more accurate ETA predictions that improve customer service, carrier-reliability assessments, traffic and weather conditions, and rate forecasts for shippers that see up to two weeks into the future.
These types of technology approaches paired with forward-looking seasonality planning and shorter bid cycles should work together to ensure you get your products to their final destinations by target dates.