Tuesday, February 1, 2022 is a date supply chain managers will want to mark on the calendar. This date—the day of the Chinese New Year—is when many industry experts estimate the disruptions and delays currently upending global supply chains will finally start to dissipate.
While the shortages of cleaning and paper supplies prevalent during most of 2020 have largely abated in many countries, numerous supply chain challenges remain. The pandemic showed how tenuous many supply chains already were.
“A lot of companies were pushed to their limits, so of course this is what happened,” says Ethan Frisch, co-founder and co-chief executive officer with Burlap and Barrel, which provides spices sourced directly from farmer cooperatives and small farms. “It was on the verge of happening anyway.”
Along with transit delays, Frisch’s company saw prices for shipping containers jump sevenfold.
In early summer 2021, when many countries loosened restrictions around COVID, they also unleashed pent up consumer demand, says Adam Hill, president and COO of logistics consulting firm Scarbrough International. That has resulted in lead times stretching six to nine months out, or into early 2022, when some semblance of normal might return, he adds.
The pandemic created something like a “game of musical chairs,” says Hitendra Chaturvedi, professor of supply chain management at Arizona State University.
When the lockdown started, many empty shipping containers remained where they were.While Asia opened up before many other regions, it had few shipping containers, many of which remained locked in pandemic-hit countries.This “artificial container shortage boosted prices,” Chaturvedi adds.
Then, there are the multiple one-off disruptions. In March 2021, the Ever Given, along with its approximately $1 billion cargo, remained stuck in the Suez Canal for nearly a week. A few months later, a COVID-19 outbreak at China’s Port of Yantian led to a six-day halt of export containers. According to one report, more than 90% of the world’s electronics move through this port.
The percentage of “blank sailings,” in which carriers skip a port, averaged between 20 and 67% through mid-June 2021 for the three major alliances, according to an analysis by project44.
“All these challenges are because demand is outpacing supply to such a degree that there isn’t much room for any slack should a sudden disruption occur,” says Nick Marro, lead analyst, global trade, with the Economist Intelligence Unit.
International passenger air travel, with planes often used to transport cargo, remains well below pre-COVID levels. In April, the International Air Transport Association (IATA) forecast revenue passenger kilometers (RPKs) for 2021 to be just 43% of 2019 levels.
Some steps shippers traditionally take to avoid congestion have lost effectiveness. For example, congestion at the Port of Los Angeles prompted some carriers to move to the Port of Oakland. However, they weren’t alone.
“You can pull these levers for so long, but everyone else is also pulling them,” says Brian Whitlock, senior director analyst with Gartner. The traffic jams simply shift from one place to another.
Securing space and equipment were their greatest supply chain challenges, according to nearly two-thirds of respondents to an April 2021 webinar survey by Flexport Inc. In navigating today’s global logistics challenges, “no silver bullet exists,” says Anders Schulze, Flexport’s global head of ocean and trucking.
However, the following steps can help.