Is Supply Chain Disruption Nearing an End?
Updated: Aug 9, 2021
Supply chain disruptions have plagued us for so long that the question on everyone’s mind is, “When will it ever end?”
Although some experts say there may be light at the end of this tunnel—others aren’t so optimistic.
Since nailing down a specific timeframe for the end of supply chain woes is a seemingly impossible task, we’ll take a look at what various experts say and the current status of the capacity crunch.
What Industry Experts Say
While opinions about the supply chain outlook vary, it seems most experts are predicting that current disruptions will last into 2022.
One exception is Mario Cordeiro, Executive Director of the Port of Long Beach, who is quoted in an article by Ian Putzger in The Loadstar as saying, “We see light at the end of the tunnel, with regard to moving toward some normalcy towards the end of the year.”
But Griff Lynch, Executive Director of Georgia Ports Authority, is cited in the same article predicting continued disruption at least until early next year: “We easily see this going up to Chinese New Year, and there’s a lot of indications that it could go beyond that.”
Judah Levine, Research Lead at Freightos Group, agrees: “Things are supposed to return to some equilibrium once consumer demand shifts markedly from goods to services, but even then low inventory levels will require some restocking. This will take us to the next mini-peak, which is around lunar new year at the beginning of February,” writes Putzger.
Views like these have logistics companies urging their customers to get Christmas orders in much earlier than normal to compensate for expected delays, or risk missing the holiday all together.
In a recent American Shipper article, Lori Ann LaRocco cites a June benchmark survey conducted by the National Retail Federation (NRF) that indicates many retailers are adding weeks to their supply chains in order to deal with the congestion.
Quoted in the article, Jon Gold, NRF’s Vice President of Supply Chain and Customs Policy said, “Over 70% of respondents indicated that they would be moving up shipments for peak season to July, August and September, with August potentially being the busiest month.”
Supply Chain Disruptions and the Capacity Crunch
In a recent post, we examined 7 reasons for the capacity crunch that are contributing to supply chain disruptions.
Since the capacity crunch is such a cause-and-effect dynamic, let’s look at three of these interrelated issues—COVID-19, port congestion, and container shortages—to determine current status and what that may mean for returning to some semblance of normal.
As vaccinations increased, things seemed to have been getting better on the COVID-19 front. But then the delta variant reared its ugly head and infection rates began to tick up once again. In some parts of the world, that has meant a return to some level of restriction and partial or complete shutdowns.
As David J. Lynch of The Washington Post points out: “Fresh coronavirus outbreaks are forcing factory shutdowns in countries such as Vietnam and Bangladesh, aggravating supply chain disruptions that could leave some U.S. retailers with empty shelves as consumers begin their back-to-school shopping.”
Lynch isn’t the only one warning about the continuing impact of COVID-19.
A recent Fitch Ratings report indicates that as a result of its effects, port congestion could continue through the rest of 2021 and into 2022. Noting record volumes at U.S. cargo ports, Fitch cites the challenges of “maintaining operational efficiency” in the current environment of “bottlenecks and mismatched rolling stock, capacity-strained logistics networks and coronavirus shutdowns at Chinese ports.”
As a result, the research firm predicts that “Ports will continue to see congestion pressures well into the upcoming peak shipping season, with throughput patterns not expected to normalize until the beginning of 2022.”
Port Congestion and Container Shortages
The congestion Fitch describes continues at ports around the U.S., especially those with the highest volumes—like Los Angeles and Long Beach, where ships are still waiting in long lines.
In a July 14th video press conference, Gene Seroka, Executive Director of the Port of Los Angeles discussed a variety of issues affecting the port—including surging imports, dwindling exports, and ongoing container shortages: “The trade continues to be a one-way street. We’re handling a lot of imports, not enough exports, and there are way too many empties going back. This import surge has put a spotlight on the supply chain pressure points that continuously need our attention from the industry side.”
In the following video, Seroka discusses port trends like these and others—including anchorage, dwell times on container terminals, on-dock rail time, street dwell time, and more.
And in a nod to the ripple effect of persistent port congestion, the overwhelmed Union Pacific Railroad temporarily halted shipments of international containers from ports on the West Coast to its Global IV terminal in Chicago in an effort to catch up.
Quoted in a Splash 247 article by Sam Chambers, a spokesman for Union Pacific described the rationale behind such a dramatic move: “We believe this change will allow the transportation supply chain to begin working off the backlog of Global IV destined trains, while freeing up railcar assets to support import loading needs on the West Coast. We are working closely with the ocean carriers and collaborating wherever possible to improve the health of the supply chain.”
A “New Normal” for the Supply Chain?
While it may be difficult to accurately predict the end of current disruptions, a likely result of these dynamics is that the supply chain of the past may not be the supply chain of the future.
The string of tumultuous events affecting the supply chain since the pandemic started has leaders reassessing their business models in an effort to ensure today’s logistical nightmares don’t happen again.
In next weeks post, we’ll dig into the changes experts say may be needed to end supply chain disruptions—hopefully once and for all.
If you’re overwhelmed by ongoing supply chain disruptions, CLN Worldwide can help.
Contact us today. We look forward to working with you.