Some think supply chain disruptions are here to stay until 2022
The supply chain turbulence that arrived last fall was predicted by many to be a temporary event, but it’s now expected to delay upcoming holiday shipments and may linger into next year.
The National Retail Federation’s (NRF) monthly “Global Port Tracker” report predicted imports at the nation’s largest container ports would hit yet another record in August.
“Strong consumer demand has outpaced supply chain operations since late last year and could remain a challenge as the holidays approach,” said NRF VP for supply chain and customs policy Jonathan Gold, last week in a statement. “The continuing lack of labor, equipment and capacity has highlighted systemic issues and the need to create a truly 21st century supply chain to ensure resiliency against the next major disruption.”
The shipment delays were initially blamed on the global supply chain’s struggles to catch up to the resurgence in demand for consumer goods after production initially shut down with the pandemic’s emergence.
In the U.S., resultant bottlenecks have led to recent costly delays of up to five days for ships waiting to unload at critical West Coast ports, stranding thousands of containers. The congestion has exhausted warehouse space and affected the trade-offs to trains and trucks. Shortages of longshoreman, truck drivers and warehouse workers have also slowed the flow of goods.
Other recent factors exacerbating the delays include the Suez Canal blockage, COVID-19 outbreaks at shipping hubs in Southern China as well as factories in Vietnam and Bangladesh, and floods in Western Europe and China’s Henan province.
Retailers are believed to be ordering weeks ahead of time to ensure holiday delivery, but escalating transportation, freight and commodity prices are driving inflationary pressures.
On its second-quarter conference call last week, Steve Cahillane, CEO of Kellogg, admitted it’s hard to know how long the supply chain challenges will persist.
“It’s very pervasive,” said Mr. Cahillane. “There are certain things that are clearly going to unwind. Containers will eventually find their rightful places in the world, labor shortages should mitigate, but it’s hard to predict. And we’re planning for an ongoing challenging cost environment well into next year.”
- Retail Cargo Expected to Set Record in August as Merchants Move from Back-to-School to Holiday Preparations – National Retail Federation
- Where Did All the Shipping Containers Go? – The Wall Street Journal
- Warning: Book now or ‘Christmas may be canceled’ – Freight Waves
- Port Chief Sees U.S. Import Surge ‘Easily’ Lasting Into 2022 – Bloomberg
- Another shipping crisis strikes, threatening delays to Black Friday shopping – CNBC
- Cargo Congestion at West Coast Ports Driven By Cumulative Collapse of Entire Logistics Supply Chain, New Research Finds – Pacific Maritime Association
- Kellogg Company (K) Q2 2021 Earnings Call Transcript – The Motley Fool
- How can retailers best navigate supply chain turbulence? – RetailWire
DISCUSSION QUESTIONS: Do you see supply chain obstacles threatening the holiday selling season and potentially lasting into 2022? What related issues do you see as easier versus harder to resolve?