July 15th, 2021 | Karl Fillhouer | Read article on Supply Chain Brain
An already stretched supply chain in the coming months will likely face a deluge of freight unlike any we’ve seen before. There’s an economic boom on the horizon that’s going to stretch trucking coast to coast, and it’ll continue to stress transportation globally. That’s indisputable.
There are mounting challenges ahead for shippers and distributors in getting their goods to market. Now is the time to start making sure your transportation network and third-party logistics providers (3PLs) are prepared and ready to handle and position your freight when the time comes.
While well-intentioned, the current momentum toward near shoring — that is, moving manufacturing closer to home — will likely stall as the economic recovery takes off.
The demand for goods will be too great, and Americans’ desire for cheap imported goods will come to bear. In the end, it’s all about the money, and many U.S. companies will go right back to outsourcing manufacturing in China and the Pacific Rim at large.
Complicating matters further, when other countries’ economies hit a true recovery period, we’re going to be competing in the U.S. for access to manufacturing capacity within the global supply chain. That’s going to drive prices up across the board, especially for transportation services.
For example, let’s narrow in on the lumber market. If you consider the current housing market, home builders across the country can’t source the lumber they need to keep up with the demand for new homes. You can’t build a house without lumber. Issues like that will continue to spring up, or be exacerbated, as the economy hits an accelerated growth pattern. These goods have to come from somewhere, and that likely means from across the Pacific.
More maritime freight bound for the U.S. will stream across the Pacific from those Asian manufacturing hubs. Ports, especially those on the West Coast, are already overwhelmed and facing major backlogs due to the effects of COVID-19 and staffing issues. For every day there’s a backlog, it takes a port three to five days to clear it. Ports can’t keep operating at 105% on an ongoing basis in perpetuity.
More freight will likely be re-routed to East Coast and Gulf ports like Houston, Miami and Jacksonville, among others, via the Panama Canal. More freight will also likely be routed to ports in Mexico to then be trucked into the U.S.
If you’re a retailer or a distributor in the U.S., a question you need to be asking yourself is how long you want your products to be sitting out on the ocean and not being sold. Because with the wrong logistics service provider, you could be looking at additional weeks before your goods arrive via ship to be unloaded.
More than just goods being hung up in transit, maritime carriers will charge those who have containers on a ship for storage on their ship. That puts you in the position of not having products ready to go when a consumer wants them or when you need them to be there, and you’re being charged each and every day they sit on the ocean. Talk about a lose-lose.
You’ll also be competing with the likes of the largest retailers, like Walmart Inc. and Target Corp., who often buy full ships of 20,000 40-foot containers coming across the Pacific. They’re sure to have their logistics operations pushing to get to port and to market.
It’s time to make sure you’re doing the same, and that you’re pressing your logistics providers on these issues before the economic boom gets here and it’s too late.
Karl Fillhouer is vice president of sales and operations at Circle Logistics.