At first glance, it may seem that pandemic-era supply chain disruptions are all but over.
Headlines lamenting shortages of everything from PlayStations and Care Bears to medical equipment are no longer an everyday occurrence. Only six ships were waiting to dock at ports in Los Angeles and Long Beach on Tuesday, a small fraction of the 109 that were stranded outside San Pedro Bay in January. Meanwhile, the cost of sending a 40-foot shipping container from Asia to the West Coast is currently below $3,000, well below last year’s high of $20,000.
Still, the structural problems that have allowed many of the delays, price increases, and shortages of the past few years have not gone away. Delivery prices have not fully returned to pre-pandemic levels, truck drivers are still in short supply, and some in the logistics industry are already predicting problems during the upcoming holiday season. More broadly, the capitalist system responsible for manufacturing and delivering goods around the world is not “fixed”. In fact, it remains as vulnerable to disruption as ever. Consumers need more than just energy and food The Bureau of Labor Statistics released a consumer price index summary last week that relies on Pacific shipping routes, including apparel and new cars.
Federal Maritime Commission Chairman Daniel Maffei said, “When your supply chain is patients coming into the ER, you no longer bleed to death.” “But there are still many problems in the supply chain. Some of them, and maybe even most of them, predate Covid.”
Other issues, including the energy crisis that arose during Russia’s war in Ukraine, show that even as transportation costs continue to fall, those price declines are not necessarily passed on to the average person. In addition, there are many products that are still difficult to obtain. Covid-19 shutdowns in China, which manufactures much of the goods sent to the United States, have delayed production of products from clothing to contrast agents, special dyes needed for medical imaging. For packaging issues in Contributed to the nationwide shortage of Adderall. Disruptions to the US carbon dioxide supply have made production of certain types of beer more difficult, and lower water levels have slowed shipments on the Mississippi River, raising delivery costs for corn and soybeans.
These challenges highlight the complexity and vastness of the supply side of the global economy. Some people refer to this system broadly as a supply chain, but it is actually made up of many interconnected and interwoven supply chains. A single company can depend on hundreds of different supply chains. Each supply chain relies on many different products, components, and companies, sometimes around the world. Every supply chain has its own strengths and vulnerabilities, and solving bottlenecks alone is not enough to eradicate shortages or lower overall prices for consumers. .
Recode asked eight experts to assess the state of its supply chain. While some acknowledge the ongoing efforts to make various industries more resilient, many of these projects have taken years to create or have impacted consumer goods. He said companies rely on machines and products that are subject to the same manufacturing and shipping problems that they are experiencing. It doesn’t mean there is. Some defend the supply chain and say that while there were delays, the system never really “broken”.
Chris Caplice, executive director of MIT’s Center for Transportation and Logistics, said: “You saw all the warts and everything, but it kept working.”
Still, the vulnerabilities seen throughout the pandemic can be problematic. Covid-19 was certainly an unprecedented global event, but there is no reason to think that future disasters will not affect international trade again.Potential geopolitical conflict and the devastating effects of climate change is already on the horizon. These interviews have been edited for clarity and length.
Is the supply chain making inflation worse or worse?
Willie Shi, Professor of Management Practice at Harvard Business School, said: Retailers have too much unsuitable inventory to unload. Demand has dropped, so shipping costs have fallen, but that doesn’t mean there aren’t still bottlenecks and cost increases, whether it’s in labor or primary materials.
Maritime historian Mark Levinson said: over the years, [Federal Reserve] We can rely on imports to keep commodity price inflation in check. It was very difficult to raise prices in the US market because there was a lot of cheap stuff coming out of China. No more. Globalization no longer keeps inflation in check that way.
Elif Akçalı, Professor of Industrial and Systems Engineering, University of Florida: These new numbers raise concerns about the impact on supply chains in the near future. High inflation not only increases the costs associated with handling and storing inventory in the supply chain, but it also increases the cost of borrowing money to acquire the inventory in the supply chain in the first place. Therefore, the total costs associated with acquiring, handling, and storing inventory increase.
Shipping costs are down, but what about the overall supply chain?
Federal Maritime Commission Chairman Daniel Maffei said: Most of the problem seems to be inland. It’s like a sink, right? When the sink is clogged, it is said to be broken, but it is not actually broken. Don’t throw away the sink. It’s a pipe!
Our supply chain problems are now deeper in the supply chain (inland) and include equipment shortages and the inability to move equipment, rather than port problems. Some ports are currently experiencing congestion.we need more [empty containers] It’s in the middle of America with too many people sitting in the harbor.
Sharae Moore, president of She Trucking, a diversity-focused trucking nonprofit, said: The supply chain is in transition. We are experiencing a supply chain that pivots to 21st century technology. We’ve seen more companies test self-driving cars and build automation into their supply chain systems. Within the next five years, automation will dominate the industry. We also recognize the need for improvements in the areas of product shipping and receipt to ensure that products reach consumers faster. There is an urgent need to educate and train new drivers to meet this high demand.
Fiona Lowbridge, Vice President of Client Success at ALOM Technologies, said, Infrastructure is still struggling: ports, roads, bridges, airports, and other physical elements. We also suffer from a lack of technical cooperation, fragmented regulations and confusion. They are also plagued by the impact of climate change on their supply chains. For example, low water levels in rivers may prevent barges from moving cargo.
Why isn’t the supply chain back to ‘normal’ compared to pre-pandemic? What problems remain?
Chris Caplice, executive director of MIT’s Center for Transportation and Logistics, said: Didn’t you get everything you really wanted during the pandemic? Even during shutdowns and lockdowns, the supply chain never stopped working. In some cases it took a little longer. …so you complain about running out of toilet paper, but were you really that short?
explanation: Shipping is just one aspect of supply chain operations. If your supply chain operates as it did pre-pandemic, this means that your system has been restored “as is” with pre-pandemic vulnerabilities. It’s as if the pandemic never happened. It’s as if we learned nothing from our experience during the pandemic.
Moore: Compared to when the pandemic began, carriers large and small were battling higher fuel costs, lower freight rates, higher insurance premiums, a lack of truck parking and higher equipment costs. Before the pandemic, we saw megacarriers go out of business and run out of drivers. I would like to see more opportunities for professional truck drivers and minorities to rise to higher management positions within his chain of supply.
Nick Pinkston, Founder and CEO of industrial parts marketplace Volition, said: I’m trying to build a factory to make things here as well. I am now thinking of a particular person who builds a sheet metal shop. They buy all these motors to make machines. They are five months behind him. You have to redesign the machine to accept a different motor or wait 5 months. Bad either way.
Si: Some areas have improved and I think they will continue to improve rapidly. For example, the automotive sector, which was short on supplies and parts, especially chips, is improving rapidly. There are still some areas that need more time.
Are supply chains today more resilient than they were in the early days of the pandemic?
Levinson: It is difficult to make generalizations about supply chain reliability. In general, yes, our supply chains are working much better than they used to.
Pinkstone: I think if we had a pandemic today, it would actually be a little bit better. It’s going to take years to really build this resilience, and it will always be a short-term gain to not do something like this. Keeping inventory increases all prices permanently. You can’t trust companies alone because they always underinvest in stuff like this.
explanation: Structural changes needed to build true resilience in supply chains (diverse supplier pools, increased emergency stockpiling of critical commodities, greater visibility into supplier operations, consideration of supply and demand risks across the supply chain) deep sharing) is not done. Not only does it take time, it also requires dealing with business practices and shifting focus from minimizing costs to time required for recovery.
Low bridge: It is becoming increasingly clear that some raw materials are only produced in certain countries or regions. I think we all need to be concerned about the effects of this concentration. It makes us all vulnerable. We continue to be concerned as it will take time to repair the physical infrastructure. We need to be able to scale our infrastructure where it is currently crumbling.
Do you have any advice for consumers?
Caprice: You can find discounts everywhere. Go to TJ Maxx, go to Marshall’s. Target is robbing millions of dollars from its inventory as things come in that it couldn’t cancel immediately. I don’t think this year’s Black Friday is an event. It’s probably already starting early as retailers are nervous due to sluggish demand. The same thing will happen with pickup trucks and cars that are stopped because they don’t have chips on them. A tip would come and then it would be excessive.
Hug the driver or hug the worker at the distribution center. Frontline workers were undervalued and never stopped working.