The supply chain is critical to our everyday lives. Supply chains are how goods are transported around the world, including things like food and medicine. The supply chain is technically defined as a network between a company and the suppliers and customers. Supply chains also include making raw goods into products that can be sold.
In the past couple of years since the start of the COVID-19 pandemic, there have been enormous issues in supply chains. In many ways, these issues are worse now, even than at the height of the pandemic.
The following explores some of the things to know about supply chains right now and what the future might look like.
1. Port Overcrowding
One of the biggest issues impacting supply chains right now is snarls at major ports. After the pandemic hit America, people went on buying sprees. They were ordering items online at paces not seen before. Imports increased by 20% in 2021.
That led to the start of some of the issues we’re still seeing.
There have been global delays at ports and terminals. Some of the country’s biggest ports in places such as Los Angeles and Savannah have experienced major overcrowding.
2. Lack of Storage Space
Another issue that’s leading to the extreme effects on supply chains is the fact that there’s not enough storage space. This is due in part to just-in-time manufacturing. Just-in-time manufacturing refers to a scenario where manufacturers produce goods to meet demand just in time.
American companies are now rethinking this approach to manufacturing, so it’s likely that more commercial storage space is going to be needed.
If companies are going to be forced to store large stock to protect themselves from disruptions in supply chains, it’s going to cause more problems as far as a lack of storage space.
Data shows that warehouse vacancy is at a record low point of 3.6%. There is likely to be an increase in demand as more companies re-shore manufacturing and stop their just-in-time approach. As demand goes up, American warehouses are simply running out of room.
More storage space is inevitably going to have to be built.
3. The Growing Need for Workarounds
Companies that want to be ahead of the continuing breakdown of supply chains are seeking out and putting into place workarounds. For example, if a retailer finds that it’s short on storage space, it’ll buy a warehouse. If a shipper can’t get access to a container, they’ll make one, and companies that can’t book with ocean carriers are chartering boats.
Amazon and some other major shipping companies are making their way into airfreight as part of their businesses, and other workaround solutions include shifting to third-party air freight carriers, using in-house trucking, and identifying alternate ports.
4. Materials Prices
Inflationary pressures are now weighing heavily on supply chains. Energy costs and the costs of raw materials are now significantly higher than they were a year ago.
Consumers are seeking record-setting inflation, but input costs for manufacturers are much higher even. For example, in February, aluminum prices hit an all-time high.
It’s not likely that input cost prices are expected to let up any time soon.
This, paired with the supply chain disruptions, is an impediment to growth for manufacturers.
5. Labor Issues
As if the supply chains around the world needed other issues to grapple with in addition to everything listed above, there are also a slew of labor issues.
The labor issues are multifactorial.
First, we’re in the midst of what’s being called the Great Resignation. Since the start of the pandemic, employees have been leaving their jobs in droves for many reasons, including health and safety concerns and finding higher-paying positions. Businesses are having a tough time filling positions.
Then, many countries are also still in the midst of omicron. For example, China recently imposed lockdowns on large parts of the country, furthering supply chain issues.
6. When Will It End?
Consumers are very much feeling supply chain problems. It feels surreal in America to go into a store and see empty shelves or wait for months for items you order, but that’s everyday life right now. Everything from medications to cars is being hard hit.
As far as when it will end, it doesn’t look like it will any time soon. The issues that are affecting supply chains require long-term solutions and a complete shift in logistics and trucking solutions. They aren’t things that can be fixed overnight, even as businesses use workaround solutions. In addition, if you are going to transport heavy machineries and equipment from one place to another, make sure to secure Overweight Permits.