Victoria Kickham, an editor at large for Supply Chain Quarterly, started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for Supply Chain Quarterly's sister publication, DC Velocity.
Industry analysts say attempts to expand operations at the ports of Los Angeles and Long Beach will do little to improve the nation’s supply chain woes, citing broader challenges and a longer road ahead to managing the accelerating volume and tight capacity that has defined supply lines this year.
The reaction comes in response to the Biden Administration’s efforts this week to move the ports of Los Angeles and Long Beach toward 24/7 operations, which port officials say they are working quickly to accomplish, although they have given no timeframe for when the expanded operations will begin. In a press conference Thursday, Port of Los Angeles Executive Director Gene Seroka said discussions between port officials and the various stakeholders at the port—cargo holders, ocean carriers, trucking companies, equipment operators, labor unions, and so forth—began Thursday and that all the players are “moving as fast as possible” to make it happen.
As of Thursday, there were 62 ships at anchor outside the Port of Los Angeles, with another 25 due to arrive within days, Seroka said. Cargo volume through the port has increased about 30% this year. In September, the port moved 748,472 twenty-foot equivalent units (TEUs), down about 6% compared to record-setting September 2020 volume and marking the second-busiest September in the port’s history.
Expanded operations may help ease the situation, but it’s not a long-term fix for the slowdowns the nation has been experiencing, experts say.
“There’s really not a lot the ports or supply chain participants can do this year, or even possibly next year,” to alleviate overstressed supply chains, said Brian Whitlock, senior director analyst for consulting firm Gartner. “The challenges they face are significant and much more broad. It’s not just a physical issue. It’s terminals, technology, chassis availability, infrastructure, and it’s labor. Moving containers out of that port is great—that’s what needs to happen to unload the ships idling at sea, but it’s going to do very little to change the landscape of the backlog today, and certainly does little to affect the holidays or year end.”
Sebastien Breteau, CEO of global supply chain and compliance service provider Qima, agrees, emphasizing that the Biden plan only addresses part of the problem. With Thanksgiving and associated peak holiday shopping season just six weeks away, he says the plan is unlikely to move the needle very much.
“The 90-day sprint that the Biden administration has planned will help alleviate some of the challenges that we’re facing within the supply chain. However, the administration’s plan focuses on the end pieces of the chain when we’re seeing that there are issues and challenges at every stage currently,” according to Breteau. “This will continue to put pressure on supply chains, especially as we head into holiday shopping season. Consumers should still expect lengthy delivery windows, supply shortages, and potential quality issues as factories scramble to fulfill orders as quickly as possible and meet delivery deadlines.”
Strong consumer spending and accelerated e-commerce volume are expected through the end of the year, according to freight forwarder and customs broker Flexport, which publishes a monthly report on goods demand based on proprietary shipping data. That demand will stress the trucking industry as well as ports and will take time to work through, according to Phil Levy, Flexport’s chief economist.
“The unusual pandemic-era demand for goods has exceeded the effective supply capacity for far longer than the system is designed to handle, but supply capacity is very hard to change quickly,” Levy said in a statement. “It takes time to build new ships, expand ports, or recruit and train new truck drivers. In opening the Port of LA full-time, the next question will be whether or not there are enough trucks to carry out the additional volume and how efficiently they can get in and out. The administration can and should make the system more efficient, but the core problem will still come down to demand, which our Flexport Platform data doesn’t forecast to recede anytime in the near future, barring an income shock.”
Gartner's Whitlock added that the larger question moving forward is how the Biden administration will engage with ports, terminals, shippers, transportation companies, and the like in a conversation about what can be done to address the broader problems affecting supply chain productivity—including the need for digital transformation, visibility, and transparency; making supply chain careers more attractive and competitive; and addressing automation and infrastructure challenges.
We may be living in a world full of technology, but strategy and focus remain the top priorities when it comes to managing a business and its supply chains. So says Roberto Isaias, executive vice president and chief supply chain officer for toy manufacturing and entertainment company Mattel.
Isaias emphasized the point during his keynote presentation on day two of EDGE 2024, a supply chain conference sponsored by the Council of Supply Chain Management Professionals (CSCMP), being held in Nashville this week. He described Mattel’s journey to transform its business and its supply chain amid surging demand for Barbie-branded items following the success of the Barbie movie last year.
Isaias discussed the transformation on two fronts: Commercially, through the revitalization of its brands that began years ago, and logistically, through a supply chain strategy focused on effectiveness and cost leadership.
Today, Mattel makes millions of toys and is steadily moving beyond the toy aisle with its franchise mindset, becoming a major entertainment company as well. Isaias told the audience Mattel currently has two films in production and 14 others in development, and its television studios business has 13 series’ in production with more than 35 in development.
And as for those supply chain gains? The company has saved millions, increased productivity, and improved profit margins—even amid cost increases and inflation. For the full story on Mattel’s transformation, see our feature story from this past summer.
And Isaias left the EDGE audience with five lessons he learned from his experience in leading change:
The business is our boss;
Don’t delegate complexity;
Take bad news well;
Be fair and take care of people;
Lead the execution.
CSCMP’s EDGE 2024 conference runs through Wednesday, October 2, at Nashville’s Gaylord Opryland Hotel & Convention Center.
Confronted with the closed ports, most companies can either route their imports to standard East Coast destinations and wait for the strike to clear, or else re-route those containers to West Coast sites, incurring a three week delay for extra sailing time plus another week required to truck those goods back east, Ron said in an interview at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
However, Uber Freight says its latest platform updates offer a series of mitigation options, including alternative routings, pre-booked allocation and volume during peak season, and providing daily visibility reports on shipments impacted by routings via U.S. east and gulf coast ports. And Ron said the company can also leverage its pool of some 2.3 million truck drivers who have downloaded its smartphone app, targeting them with freight hauling opportunities in the affected regions by pricing those loads “appropriately” through its surge-pricing model.
“If this [strike] continues a month, we will see severe disruptions,” Ron said. “So we can offer them alternatives. We say, if one door is closed, we can open another door? But even with that, there are no magic solutions.”
Turning around a failing warehouse operation demands a similar methodology to how emergency room doctors triage troubled patients at the hospital, a speaker said today in a session at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
There are many reasons that a warehouse might start to miss its targets, such as a sudden volume increase or a new IT system implementation gone wrong, said Adri McCaskill, general manager for iPlan’s Warehouse Management business unit. But whatever the cause, the basic rescue strategy is the same: “Just like medicine, you do triage,” she said. “The most life-threatening problem we try to solve first. And only then, once we’ve stopped the bleeding, we can move on.”
In McCaskill’s comparison, just as a doctor might have to break some ribs through energetic CPR to get a patient’s heart beating again, a failing warehouse might need to recover by “breaking some ribs” in a business sense, such as making management changes or stock write-downs.
Once the business has made some stopgap solutions to “stop the bleeding,” it can proceed to a disciplined recovery, she said. And to reach their final goal, managers can use the classic tools of people, process, and technology to improve what she called the three most important key performance indicators (KPIs): on time in full (OTIF), inventory accuracy, and staff turnover.
CSCMP EDGE attendees gathered Tuesday afternoon for an update and outlook on the truckload (TL) market, which is on the upswing following the longest down cycle in recorded history. Kevin Adamik of RXO (formerly Coyote Logistics), offered an overview of truckload market cycles, highlighting major trends from the recent freight recession and providing an update on where the TL cycle is now.
EDGE 2024, sponsored by the Council of Supply Chain Management Professionals (CSCMP), is taking place this week in Nashville.
Citing data from the Coyote Curve index (which measures year-over-year changes in spot market rates) and other sources, Adamik outlined the dynamics of the TL market. He explained that the last cycle—which lasted from about 2019 to 2024—was longer than the typical three to four-year market cycle, marked by volatile conditions spurred by the Covid-19 pandemic. That cycle is behind us now, he said, adding that the market has reached equilibrium and is headed toward an inflationary environment.
Adamik also told attendees that he expects the new TL cycle to be marked by far less volatility, with a return to more typical conditions. And he offered a slate of supply and demand trends to note as the industry moves into the new cycle.
Supply trends include:
Carrier operating authorities are declining;
Employment in the trucking industry is declining;
Private fleets have expanded, but the expansion has stopped;
Truckload orders are falling.
Demand trends include:
Consumer spending is stable, but is still more service-centric and less goods-intensive;
After a steep decline, imports are on the rise;
Freight volumes have been sluggish but are showing signs of life.
CSCMP EDGE runs through Wednesday, October 2, at Nashville’s Gaylord Opryland Hotel & Resort.
The relationship between shippers and third-party logistics services providers (3PLs) is at the core of successful supply chain management—so getting that relationship right is vital. A panel of industry experts from both sides of the aisle weighed in on what it takes to create strong 3PL/shipper partnerships on day two of the CSCMP EDGE conference, being held this week in Nashville.
Trust, empathy, and transparency ranked high on the list of key elements required for success in all aspects of the partnership, but there are some specifics for each step of the journey. The panel recommended a handful of actions that should take place early on, including:
Establish relationships.
For 3PLs, understand and get to the heart of the shipper’s data.
Also for 3PLs: Understand the shipper’s reason for outsourcing to a 3PL, along with the shipper’s ultimate goals.
Understand company cultures and be sure they align.
Nurture long-term relationships with good communication.
For shippers, be transparent so that the 3PL fully understands your business.
And there are also some “non-negotiables” when it comes to managing the relationship:
3PLs must demonstrate their commitment to engaging with the shipper’s personnel.
3PLs must also demonstrate their commitment to process discipline, continuous improvement, and innovation.
Shippers should ensure that they understand the 3PL’s demonstrated implementation capabilities—ask to visit established clients.
Trust—which takes longer to establish than both sides may expect.
EDGE 2024 is sponsored by the Council of Supply Chain Management Professionals (CSCMP) and runs through Wednesday, October 2, at the Gaylord Opryland Resort & Convention Center in Nashville.