Can 24/7 supply chain operations save Christmas?

Discussion
President Biden met with senior supply chain officials and stakeholders, Oct. 13, 2021 - Photo: The White House
Oct 18, 2021

President Joe Biden last week said the government is partnering with major ports, retailers and carriers to ramp up efforts to relieve some of the port congestion threatening holiday sales and escalating inflation.

Ports in Los Angeles and Long Beach, which together bring in 40 percent of the country’s shipping containers, will expand to “24/7 service” to handle an estimated 500,000 containers waiting on cargo ships offshore. The ports are typically closed down at night and on weekends. With highways less crowded in the evening, cargo can also leave ports at a faster pace.

At the same time, Walmart, Target, Home Depot, FedEx, UPS and Samsung have committed to round-the-clock logistics operations to deliver the goods to warehouses, stores and homes. Walmart is committing to as much as a 50 percent increase in the use of off-peak hours.

Senior administration officials said the commitments will “pave the way for smaller retailers to also get their goods from a 24/7 model.”

No guarantees were given that holiday disruptions would be avoided. Officials noted that outside factors contributing to the disruptions include expenditures shifting from services to more durable goods during the pandemic and the spike in online purchases. Pandemic-related shutdowns or slowdowns at foreign factories and ports are also a contributor. The administration is hoping donations of vaccine doses across Southeast Asia will help.

Longer term, the Biden administration is seeking “the biggest investment in ports in our history” as the country’s shipping and freight infrastructure is being overwhelmed by import-export volume. The investments will also add flexibility to handle a pandemic, extreme weather, climate change, cyberattacks or other unexpected disruptions.

Ultimately, however, the supply chain is run by the private sector, including terminal operators, railways, trucking companies, shippers and retailers, and they’ll need to “step up” to solve the problems, according to Pres. Biden.

In a blog entry, Target said that it is open to expanding the country’s infrastructure to provide for greater movement of goods and to increasing data sharing across industries to help with port traffic control. The discounter added, “We also support exploring the expansion of offsite storage for slow-moving containers to allow easier access to containers moving more quickly.”

DISCUSSION QUESTIONS: What near-term solutions do you see to reduce or resolve the country’s stubborn supply chain disruption? Which of the steps cited in the article will likely offer the biggest benefit?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Expect more competitors to collaborate, as navigating urgent supply chain chaos is now a bigger priority than retail rivalry."
"The move toward 24/7 port operations is warranted under these circumstances. However, how does the labor shortage play into this?"
"In hindsight, the White House should have identified and intervened in the supply chain problem three months ago, instead of reacting too late to bad headlines."

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19 Comments on "Can 24/7 supply chain operations save Christmas?"


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Neil Saunders
BrainTrust

Longer hours are part of the solution. However given that the crunch is happening at all points of the supply chain – from overseas manufacturing to shopping to logistics – it is unlikely we can avoid disruption entirely. While investment is very welcome and prudent, we also need to recognize that part of this is down to the exceptional demand for products as we have bounced back from the pandemic. I have heard from many retailers and manufacturers that they are reluctant to invest too much in additional capacity until they understand how permanent this elevated demand is.

Mark Ryski
BrainTrust

Moving to 24/7 won’t solve the problem, but at least it’s an effort to try to minimize it. The fact is the issues plaguing the supply chain far transcend the U.S., so it seems to me that there is only so much the U.S. government can do. I think the move to 24/7 can’t hurt and seems reasonable given the circumstances.

Martin Whitmore
Guest

Although these efforts will likely fall into the “too little, too late” category to really help smaller businesses significantly they are still worthwhile. What really needs to happen is a refocus of businesses to better understand their entire supply chain and where items are in that chain. This means a renewed focus on improved transportation management systems and continued focus on RFID source tagging to help track items from manufacture to the store customer.

Doug Garnett
BrainTrust

Supply chain problems aren’t primarily at the ports – they reach much further off-shore. That said, it is good to see a president try to bring people together and achieve something which businesses and customers need. How much will it help? That’s hard to say right now. It will help. But can it prevent retailer losses due to lack of goods in the stores at peak buying season? I’m not enough of a fortune teller to predict that one.

Richard Hernandez
BrainTrust

Ports have started operating 24/7 for a few weeks but the issue is having staff to unload containers and drivers to take the product to their destination across the country. Until these positions are filled, the opening of ports will not reduce the stockouts on the shelf.

Paula Rosenblum
BrainTrust

Longer hours at ALL points in the supply chain are key. Otherwise we will find five chains doing well (those that leased their own containers) and all others suffering from out-of-stocks.

We have been talking about this issue for more than a year. The “popular press” just woke up to it, but it has been staring down the industry (and many others — tried to buy a car lately?) for quite some time.

Jeff Sward
BrainTrust

I’m still not clear if this is a demand/capacity issue or a timing issue. The bounce back from the pandemic created a surge, and the magnitude of the surge overwhelmed the system, from factory floor to container availability to port congestion, to worker and truck availability. Seems like bouncing production around the globe just rearranges the deck chairs. It feels like the solution lies in healthy workers, at every level, and a return to a more predictable level of demand are at the foundation of a solution. Then the mechanics can be sorted out.

Jennifer Bartashus
BrainTrust

The issue is that only large-scale operators (Walmart, Target, Home Depot, Costco, UPS, FedEx, Samsung and others) have the resources and capabilities to pivot and help with the solution, such as longer hours at ports, using smaller ports where possible, and having trucks and rail capacity available. So while they can certainly help ease some of the congestion, it’s not going to fully solve the problem. Structural issues like needing more truck drivers won’t disappear soon, and infrastructure to reduce the need for long-haul trucking needs to be improved. Offsite storage of ocean containers is a good idea, but real estate for this is lacking. Warehouse space has been snapped up in the past two years by Amazon and others, limiting availability and driving up costs. The challenges facing smaller retailers remains – products may be tied up and the cost of moving them, once here, are still elevated.

Lisa Goller
BrainTrust

To derisk the global supply chain, we’ll see more domestic sourcing, transportation partnerships and supplier contingency planning. Expect more competitors to collaborate, as navigating urgent supply chain chaos is now a bigger priority than retail rivalry.

Dick Seesel
BrainTrust
Any last-ditch effort by the government or by retailers to solve these problems is better than doing nothing, but there is going to be some lost business over the next two months or so. It comes down to a host of root causes that can’t be fixed overnight: How did the retail industry collectively fail to forecast (or react to) the rebound in consumer demand during 2021? Empty shelves could be excused during the first half of the year, but stores headed into the second half with too little inventory bought or in the pipeline. Why is there a shortfall of chips and other electronic components, hampering sales of everything tech-dependent? (Have you tried to buy a new car lately?) How does this issue get corrected by 2022? How much is the supply chain problem interwoven with the employment problem? Jobs are out there but difficult to fill for a variety of reasons, and this extends from truck drivers to grocery workers. In hindsight, the White House should have identified and intervened in the supply… Read more »
Ryan Mathews
BrainTrust

The problem isn’t just the ports. It’s also offshore manufacturing, a shortage of drivers, poor to terrible physical infrastructure aka roads, weather, labor shortages in a host of related industries, and excessive demand. This isn’t the case where you can rank-stack solutions and identify the most promising one. It’s a system, and systems need every segment in their network to be working efficiently and effectively.

Steve Montgomery
BrainTrust

Operating 24/7 can’t hurt, but whether it will save Christmas is questionable. The issue isn’t as simple as getting the containers off the ships and on to the docks. There is a large shortage of drivers to get the containers of goods to a rail hub where they can be loaded onto rail cars. There is also a shortage of drivers to move the containers when they need to be loaded on trucks to get them to a warehouse and again to go from the warehouse to the stores.

Mohamed Amer
BrainTrust

For this Christmas season, going to 24/7 supply chain operations will ease some of the existing bottlenecks at ports and within U.S. borders. However it will add new risks in terms of skilled labor shortages, higher costs, and quality control issues as networks flex throughput capacity.

The announced partnership and collaboration between the government and the private sector is a welcome sign toward easing the current bottlenecks. Although realized relief will not erase ongoing supply imbalances and offshore flow and production bottlenecks, this public-private collaboration will indeed reduce the severity of the ongoing problems for the U.S.

Beyond Christmas, efforts must expand beyond U.S. borders, as supply networks seek to swap long supply legs for shorter ones as they de-risk operations and re-balance their flows.

Brian Cluster
BrainTrust
Expanding hours and access to the ports will be part of the solution to ease some of the back-ups at the ports. It is also welcomed that the government is encouraging collaboration among major companies that contribute a large amount of the containers moved in the US. Improved infrastructure through investment will help too but not likely before Christmas. Just like the front line workers at hospitals, the truckers, and the trucking industry has undergone considerable pressure and many hours of overtime in the past 2 years. The problem is that Canada and the US are short — over 85,000 truckers short — which impacts the ability to move containers from the ports and goods across the country. Something significant needs to be done to attract more people to trucking as a career or part-time job. The last key that is needed is data transparency, namely inventory transparency across all retail. No one’s Christmas should be ruined if there was better data about what is in stock or in local warehouses and if that information… Read more »
James Tenser
BrainTrust

I’m rather pessimistic about the supply chain mess, at least between now and the holiday sales peak. Unfortunately, the best intentions of the present administration and private entities who control the ports cannot possibly be sufficient to clear the bottleneck by Dec. 25, IMHO.

More shifts at the ports are certainly needed, but serious issues persist both upstream and downstream that must be resolved in order to get products flowing onto shelves.

As Paula, Ryan and others her observe, it’s a systemwide problem. The truck driver shortage will not be quickly resolved. Containers parked off the coast of California are not being returned to home ports in time to be reloaded with consumer goods, auto parts and industrial products already in short supply here.

Of course it’s wise to try to step up distribution of goods already within miles of our ports. It will head off the worst effects in Q4, but it won’t fix the root causes.

Craig Sundstrom
Guest

How near term? Nothing I can think of will help anyone to “save” Christmas … even if ideas could be implemented instantly (they can’t) it would do nothing for goods that should really be in stores already.

Longer term, the Feds may want to revisit the many Trump era tariffs that were implemented (guess what: it takes longer to process a 500 page manifest when there are duties than when there aren’t!); but as noted in the story many of the delays simply pertain to capacity issues that can be “solved” only with ongoing investment … a long term — indeed perpetual — need.

Mark Price
BrainTrust

The increase in hours for the ports as well as the major retailers will have the greatest short-term impact on supply chain, reducing the backlog at the ports. However, these changes do not address (1) lack of trucks to ship the product, and (2) the supply chain issues at the manufacturing sites, which will continue for some time, driven by the pandemic and the shift in product selection by consumers.

Rachelle King
BrainTrust

The move toward 24/7 port operations is warranted under these circumstances. However, how does the labor shortage play into this? While, yes, there could be benefits of overtime work for some employees, there is also risk of burn out, which will actually diminish productivity? Human resources need to be considered just as much as the logistics of keeping the lights on 24/7.

Further, to the extent possible, retailers will need to step up and address panic buying. While purchase limits are not fun, they do minimize empty store shelves, which only lead to more empty store shelves. Retailers will need to be vigilant on both ends of the supply chain.

Ricardo Pero SF
Guest
Given the disruption in the space, it’s important to note that the world is experiencing the perfect storm of challenges. No one company could have prevented the supply chain issues or manufacturing issues from the standpoint of a global pandemic, or the stress that the booming growth of online shopping and e-commerce would place on marketplaces and their sellers. Large retailers and companies in the logistics space already commit a lot of resources to helping small and medium size businesses in their operations (both directly and indirectly), but the biggest thing that they can do to help small businesses today is to be aware of the burnout potential in their spaces. As mentioned, operating 24/7 simply isn’t sustainable, and across the country we are seeing a shift in the way that workers and their employers interact. These changes in labor ripple across every industry, and while e-commerce companies can pivot and become some of the best places to work for their employees, if the labor in the industries that support us are not feeling supported… Read more »
wpDiscuz
Braintrust
"Expect more competitors to collaborate, as navigating urgent supply chain chaos is now a bigger priority than retail rivalry."
"The move toward 24/7 port operations is warranted under these circumstances. However, how does the labor shortage play into this?"
"In hindsight, the White House should have identified and intervened in the supply chain problem three months ago, instead of reacting too late to bad headlines."

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