Supply chain outlook for the new year


HIGHLIGHT – When the coronavirus pandemic began in 2020, millions of Americans began buying basic necessities like toilet paper frantically. Then, stuck at home as the world stopped, they spent what would have been vacation money on things for the house.

Shortages of lumber, microchips, aluminum and other items have worsened, with no end or solution in sight.

Even now, as the pandemic appears to be easing and people have largely returned to work and normal lives, these supply issues still don’t seem to be easing.

“One thing has become painfully apparent: a shortage of anything anywhere is affecting the production of anything everywhere,” said Edward Massood, president of Massood Logistics. The company offers 3PL logistics services and specializes in the handling and delivery of home furnishings.

“Consider the upholstered furniture. This item requires wood, steel and foam frames, ”Massood said. “If the fabric comes from Vietnam and the wooden ships from Brazil, with steel coming from coal-fired power plants in China, then you have an order book that is totally dependent on one of these essential raw materials. Each supplier depends on all other suppliers to meet commitments and delivery dates.

Name the culprit

Experts point to a litany of issues as the causes of the shortages and backlogs: cargo bottlenecks, lack of dockworkers in ports, rising fuel prices, blocking the Suez Canal for three months, skyrocketing demand and, perhaps, most notably, a huge shortage of trucks and truck drivers.

Aaron Nussbaum

“I think the biggest challenge is to keep finding workers / drivers and securing trucks and trailers, because ordering times are so far into the future,” said Aaron Nussbaum, director of logistics at GoJarrett , a national supply chain and logistics company.

GoJarrett operates two divisions for the furniture industry: Jarrett Trucking and the last mile white glove company RiteRouting by Jarrett.

“We have given sign-up bonuses, employee referral bonuses and salary increases,” Nussbaum said. “We had no problems retaining the drivers / warehouse workers; it was more about needing more because of all the growth we’ve seen throughout 2021. ”

Shailu-Satish-Headshot

Shailu Satish

“Even before COVID-19, there was a shortage of drivers, and the pandemic only exacerbated the shortage issues,” said Shailu Satish, co-founder of DispatchTrack, a provider of software for shipping companies. logistics. “Hiring a new driver, training him, having his background checked, etc., takes time. “

Satish is right. A report released in October by the American Trucking Assns. estimated the industry is short of 80,000 drivers, a number that could double by 2030 as drivers continue to retire.

Young people do not seem to be entering the industry quickly enough. The average age of a driver is 47 according to career tracker Zippia, and that number also appears to be on the rise.

Nussbaum believes these problems have been made worse by the pandemic.

“I think quite a few drivers have decided to retire throughout the pandemic,” he said. “Another issue is with CDL schools, which are so supported and understaffed that it’s difficult to get your CDL today in a timely manner. Finally, I think the last problem is to find enough trailers and trucks in order to have enough equipment to take on more drivers. “

The big question is what can really be done to address the labor shortage. Better wages? Better benefits? A greater push for trades on young people? Automated trucks? Perhaps wait until the demand for products wanes. Or maybe the shortages will go away on their own as the world returns to normal.

The answer remains unclear.

Problems in ports

Driver shortages are obviously not the only problem.

More than 5,000 container ships are currently on the water, many of them idle outside major ports as ports grapple with COVID-19 outages, manpower issues, Massood says. and, again, a shortage of trucks and drivers.

The Biden administration said it would take steps to alleviate these issues, including moving major ports to 24-hour operation. Ports would also be allowed to redirect other federal funds to help.

But even if ships and ports are unloaded, labor issues and trailer shortages will again make themselves known, as these goods still have to travel by truck or train to warehouses and distribution centers.

A light at the end of the tunnel?

Logistics companies seem to agree that the situation will worsen in the near term, but that the recovery will come. The question then is when.

chris randall, freight club

Chris Randall

“The supply chain situation will eventually improve,” said Chris Randall, senior vice president of Freight Club, an intermediate logistics platform. “It’s more painful to see in the short term, but action is being taken by the government and the companies involved.

“We are confident that our carriers are working hard to take on new drivers and support team members, and we expect demand to drop after the holidays, which should alleviate some of the pressure,” Randall said. “Although the tensions in the logistics industry do not go away after the holidays, we believe there will be a small drop in demand and sufficient response from carriers for the labor situation to improve.”

James Liguori, director of branding and strategy for FragilePak, a national logistics and delivery company based in Nevada, is also optimistic.

“We believe that the work situation will naturally evolve towards a more active labor market,” said Liguori. “Necessity is an excellent driving force for finding a job. We believe that by mid-2022 the supply chain will start to normalize. “

But the mid-2022 prediction may turn out to be overly optimistic. Ashley Furniture Inds. CEO Todd Wanek doesn’t expect the situation to improve until 2023.

During an October webinar with the Home Furnishings Assn., Wanek said transportation, containers, trucking and railings are all in bad shape.

“We are struggling to hire truckers,” he said. “The shortage is worse than it was. Every part of the supply chain is a weak point right now.

Wanek urged retailers to allow at least four to six months of delay for dining room furniture and at least six months for wood bedroom furniture.

About Oscar L. Smith

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