It’s a tough environment. So, you might ask yourself when will things return to normal?
That’s a reasonable question. But a definitive answer is elusive. Yet, we can make an educated guess. We can do that by assessing the dynamics driving these disruptions,
In this post, we’ll look at the causes of today’s disruptions. That should help us gain some insights into when you can expect a return to more normal operations.
We’ve seen many disruptions in 2021. We expected some, but not others. We’ll focus on the expected disruptions. Unexpected disruptions like cyberattacks can disrupt your supply chain. But that doesn’t mean you can’t account for them in your supply chain risk management plan.
Yet, we can estimate when things might return to normal based on known issues.
Let’s get started.
Supply Chain Bottlenecks
At the moment, supply chain bottlenecks are disrupting the flow of goods worldwide. Inbound ships have overwhelmed the ports of Los Angeles and Long Beach (LA/LB). On September 19, 2021, 73 cargo ships were waiting to enter the ports of LA/LB.
As peak season winds down, inbound ships should decrease, but not enough to be effective. Another seasonal surge will follow that corresponds to the Chinese New Year. So, don’t expect to see quick relief at ports.
To relieve port congestion, you must look beyond the ports. That means looking at available containers, warehouse availability, and trucking capacity. To solve port congestion, you must examine all the other segments of the supply chain. As you’re aware, those segments integrate with one another. So, only an integrated solution will help make a difference.
Right now, the government has prodded LA/LB to extend operating hours to 24×7 operations. As stated above, this solution misses the mark. Nonetheless, the Port of Long Beach has done so. But the port of Los Angeles originally did not intend to follow suit.
Instead, the Port of LA had planned to work on operational inefficiencies. That means improving warehouse operations and trucking. Now, the Port of LA is doing both to speed up container processing. But eliminating inefficiencies would help relieve congestion more so than extending operating hours.
Another supply chain disruption is the worldwide shortage of containers. Covid-19’s lockdowns contributed to the container shortage as consumer demand surged. That surge stemmed from consumers who spent more time living and working at home.
To ease the strain of lockdowns and remote work, consumers changed their spending patterns. They increased spending on home improvement, furniture, and office equipment. That massive shift in spending patterns created a disproportionate demand for these goods. That is, demand for non-durable goods exceeded the supply of containers.
But that’s not the only issue.
Container shortages also stem from the inefficient use of containers. Under normal operations, longshoremen emptied containers before returning them to China. That changed after the pandemic.
Once emptied, containers on the West coast were immediately shipped back to China. That eased the pressure of overstocked ports. That exacerbated the container shortage.
The trucking industry also contributed to the container shortage. As you know, the trucking industry has a persistent driver shortage, which means fewer trucks to move containers to their destinations.
Besides affecting container supplies, the driver shortage and port congestion created inventory shortages.
There’s no question the pandemic disrupted global supply chains. Then we had the blockage of the Suez Canal in March 2021. That blockage disrupted supply chains, further exacerbating inventory shortages.
So, a convergence of various disruptors affected inventories. We saw shortages of lumber. We also saw shortages of silicon chips. That affected computer and laptop availability. Also, today’s cars contain a slew of silicon chips. So, the silicon shortage, likewise, affected auto manufacturing.
You can also add many grocery items and large batteries to the list of shortages.
Operating Amid Chaos and Confusion
Global supply chains were whiplashed. One disruption led to another, that led to another, that led to another. Yet supply chains seem to be withstanding this onslaught. Some better than others.
If you want to survive these trying times, then you need a 3PL that can navigate these chaotic disruptions.
At American Global Logistics, we recognize the risks you face. But we also recognize the opportunities.
If you’re concerned about today’s chaos and confusion, call us today to find out how we can help you. You don’t have to face the headwinds alone.