In the wake of the COVID-19 pandemic, the lesson of expecting the unexpected looms large. Preparation, nonetheless, remains pivotal. For supply chain professionals, the task at hand involves sustaining the flow of commerce amidst an evolving economic landscape post-pandemic.
The repercussions of the supply shock initiated last year followed by a surge in demand have laid bare vulnerabilities in global supply chains. This led to a comprehensive review of American supply chains by President Biden through an executive order, coinciding with record-breaking container processing at the Port of Los Angeles.
As the peak season draws near, manufacturers face the challenge of expanding employment, diminishing reliance on external resources, and trimming inventory within supply chains while meeting escalating consumer demands. The necessity emerges for making supply chains swifter, more proficient, and cost-effective. To confront these challenges, supply chain managers must identify vulnerabilities and brace for an approaching peak season likely to heighten pressure on shippers and carriers in labor, capacity, transparency, and supply.
Discrepancies in the seaport shipping and receiving ecosystem have created significant imbalances. Import volumes outweigh exports, exacerbating labor shortages and storage space deficiencies at marine terminals. These bottlenecks have led to prolonged container dwell times at ports.
Complications in overseas manufacturing processes force last-minute alterations by ocean carriers, redirecting truckers to deliver empty containers over extended distances, often exceeding 40 miles from the port. This increase in distance drastically reduces efficiency, slashing container moves per driver per day by almost half.
Drayage operation inefficiencies further compound the complexity. Restricted port access due to limited appointment slots substantially elevates idle times, consequently raising the risk of demurrage charges.
Addressing these issues requires a substantial boost in available labor and yard space. Freight carriers need to embrace innovative strategies, investing in systems that streamline operations and mitigate inefficiencies. Additionally, marketplaces must display flexibility by diversifying, while independent contractors should be ready to bridge the resulting gaps in shortages.
The shortage of container chassis, essential for transporting shipping containers, stems from inefficiencies at marine terminals. As container volumes strain assets and labor capacities, only about 16% of fulfillment is achieved due to prolonged dwell times hindering the swift return of chassis to ports.
Although some advocate building more chassis, the lengthy construction time, coupled with manufacturers struggling to meet the surge in pre-peak orders, poses a challenge. Furthermore, concerns regarding financial liability deter certain carriers from investing in excess equipment. Intermodal equipment providers (IEPs) stand poised to fill this void.
IEPs offer flexible leasing and rental options while bearing the responsibility of equipment repair. To illustrate the scale of current maintenance needs, there are over 3,240 chassis awaiting repair at Los Angeles and Long Beach terminals. However, the shortage is beginning to impact IEPs, prompting vendors to explore refurbishing old chassis sourced from “chassis graveyards” to mitigate costs, albeit at the expense of shippers and draymen who typically prefer new chassis.
In light of limited options, the solution to bolstering chassis availability remains elusive. Nevertheless, independent marketplaces driven by robust technology can alleviate the strain by facilitating predictive load-matching technologies, aiding trucking companies to focus on moving loads rather than fleet management.
Additionally, the industry contends with a prolonged shortage of truck drivers, exacerbated by the pandemic’s economic impact. This shortage, persisting for nearly a decade, drives hourly rates to unprecedented highs, intensifying during peak seasons.
Addressing this driver shortage necessitates an increase in workforce, yet simply adding more drivers won’t resolve the problem without concurrent improvements in supply chain efficiency. Lengthened container and chassis dwell times, along with overflowing U.S. warehouses and shipping yards, underscore the urgency for enhanced capacity to move containers swiftly and cost-effectively.
Moreover, anticipated price hikes in fuel and services during peak season, coupled with labor shortages, will inevitably drive up shipping fees, impacting consumers. Innovations such as
Trucker-centric marketplaces are emerging as potential solutions, facilitating the matching of shippers with available capacity and aiding drivers in finding suitable loads. Aligning chassis and drivers with loads and destinations can counter some of the obstacles within the industry.
The upheavals in international shipping rates alongside the strain faced by U.S. warehouses during the pandemic necessitate improvements in operational efficiencies at critical U.S. ports. Technology emerges as a beacon of hope, offering efficient connections across the supply chain ecosystem. However, this transformation requires adaptability from supply chain managers and operators, acknowledging the inevitability of change as the peak season approaches.
Traditionally, peak seasons prompt a return to conventional operational management methods for shippers and carriers at ports. However, this year calls for a hybrid approach, combining reliable conventional techniques with innovations like freight-tracking tools or digital apps. Such digital solutions enhance supply chain transparency, communication, and troubleshooting.
Given the ongoing unexpected shifts compounding existing industry challenges, there’s an amplified demand for transparency. Shippers and carriers must diversify their approaches, leveraging efficient solutions that amalgamate all available means to ensure uninterrupted freight movement.
In summary, as the impending peak season brings forth anticipated shortages for truck drivers and container chassis, the supply chain industry must brace for challenges by seeking innovative solutions. While the landscape remains complex, a collaborative effort among stakeholders, leveraging technological advancements, and embracing adaptive strategies will be pivotal in navigating through the intricacies of the supply chain during this crucial period.
