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After taking center stage in 2021, the supply chain shortages that impacted so many corners of the business world could ease somewhat in the coming months. “Global supply-chain woes are beginning to recede, but shipping, manufacturing and retail executives say they don’t expect a return to more-normal operations until [2022],” the Wall Street Journal reports, “and that cargo will continue to be delayed if COVID-19 outbreaks disrupt key distribution hubs.”
Slightly rosier than most recent supply chain-related news reports, this one points to fewer COVID-related factory closures, energy shortages and port capacity limits in Asia as a primary driver of the optimism. “In the U.S., major retailers say they have imported most of what they need for the holidays,” WSJ points out. “Ocean freight rates have retreated from record levels.”
Even with these positive signs emerging, executives and economists say strong consumer demand for goods in the West, ongoing port congestion in the U.S., shortages of truck drivers and elevated global freight rates continue to hang over any recovery, WSJ reports. “The risk of more extreme weather and flare-ups of COVID-19 cases,” the publication adds, “can also threaten to clog up supply chains again.”
Nurturing Supply Chain Bonds
The pandemic created significant disruption across many key supply chains around the globe. The issues started in 2020 and then quickly rolled over into 2021. And while industries experienced supply chain fragility before the COVID-19 pandemic, GaN Systems’ Jim Witham says the current scale and diversity of impact are unprecedented, with shortages in critical medical equipment, consumer electronics, cars and even lumber. His company makes power conversion equipment, semiconductors and transistors, all of which were impacted by the 2021 supply chain shortages.
“The pandemic underscored the imperative of manufacturers and supply chain partners to do more than plan for infrequent and ‘100-year’ events,” Witham writes in Forbes. “We have to admit that with deep global economic interdependence, more serious disaster planning must become the defacto standard.”
Going forward, Witham sees strong bonds between supply chain partners as another must have as we move into 2022. “We can’t assume suppliers will always be there if we don’t treat them well during difficult times. Even the smallest vendor demands a new level of respect,” he writes. “How you nurture and respect every partnership within the supply chain makes a difference.”
Historic and Challenging
In 4 Supply Chain and Logistics Trends to Watch in 2022, Overhaul’s Barry Conlon discusses the “historic and challenging” few years that the supply chain and logistics sector has been dealing with. Right now, he says the industry is facing unprecedented levels of demand, short-handed fleets, a backed-up infrastructure, shipments delays and rising prices. He expects the “perfect storm” of obstacles—all compounded by a persistent labor shortage—to spill over into 2022.
“I wish I could say we’ll round the corner once we get past the holidays, but it’s more likely the situation will continue to get worse before it gets better,” Conlon writes.
To best tackle these issues, he tells shippers to plan for a prolonged talent shortage (and not just of truck drivers) and brace themselves for a continued capacity crunch. He also says the introduction of new ships, trains, ports and other logistics infrastructure could help relieve the capacity crunch. “There is no magic wand,” he adds, “and it’ll take time to catch up to the infrastructure we need.”
A World of Difference
David Buss Chief Executive Officer of USA, DB Schenker advises, “For companies looking for more immediate fixes for their current supply chain problems, some good moves to make now include mapping out the supply chain (i.e., by showing how goods move in it, where data flows, and how each point is connected both physically and digitally); making data more usable for you and your partners; and strengthening current relationships.”
“Ask suppliers and partners what they need from you, such as updated forecasts or projections,” Global Trade suggests. “Speak with carrier reps to secure capacity and discuss your seasonal volume. Tell companies how you measure their capabilities or service level agreement (SLA) success. Ask partners how they measure you.”
Those partners include the valued third-party logistics providers that have been helping you navigate the supply chain complexities in 2021, and that are prepared to continue fulfilling that role in 2022 (and beyond).
“The aim is to open lines of communication and start discussing ways to be mutually beneficial in every deal,” Global Trade adds. “When you’re a better partner during non-peak, companies are more likely to give you additional support, capacity, and leeway during peak. As we’ve seen in 2020 and 2021, that can make a world of difference.”
