By Katy Brooks, CEO, Bend Chamber
This article originally appeared in The Bulletin on February 20, 2022.
We’ve all experienced the unease of seeing empty shelves as businesses continue struggling with supply delays that are leaving them short-stocked at grocery stores, restaurants, coffee shops, and new car lots. Even online purchasers have experienced long delays and increased shipping costs.
The vulnerabilities of how goods are made, assembled, and moved across the globe have shown up prior to the pandemic, but became much more visible once COVID-19 started wreaking havoc.
How did the supply chain get so badly disrupted, and when will we see relief?
Unfortunately, what has been broken may take a while to fix. To explain, it helps to break down the sequence of how goods are made, assembled, shipped, tracked, and delivered. There is an activity at every stage from product assembly to delivery which most often connects directly to a job and a human -and we know labor is one of our most vulnerable links in the chain right now.
Before heading up the Bend Chamber of Commerce I spent about 20 years working for public ports. I used to tout how many jobs are generated by transportation and trade as an economic asset. As the labor market has tightened and COVID-19 impacts the workforce, those transportation jobs have become a liability.
Let’s break down the labor impacts by looking at how many times your product relies on a human to get to you. Add to that, the disruption of COVID-19 and the resulting labor shortage caused by its aftermath. Even with increasing automation, advanced manufacturing and self-driving transportation, the number of people who participate in the supply chain to get a product to you is staggering.
Here are some of the general intersections of humans and the supply chain:
- People make, assemble, and package the product around the world
- Others will warehouse, load/unload, track, and process shipping between modes -water, air, rail, truck
- There are those who sail ships, fly planes, and drive trains and trucks
- The last mile takes the product to the door and often includes another person to deliver and still another to stock the shelves.
The labor shortage in each of these phases is having a significant impact on transportation and supplies. The United States is experiencing a shortage of more than 80,000 truck drivers, according to an estimate from the American Trucking Association. Travel Daily Media says there will be a shortage of 34,000 commercial pilots by 2025. And the Wall Street Journal says the railway labor shortage is also in the thousands, taking hundreds of locomotives offline due to staffing shortages. Same story for the maritime industry.
There are other significant issues causing shipping delays. The Panama Canal blockage in early 2021 started a chain of events that stopped up supplies across the hemisphere. As the year went on, the continuing backup of container ships offshore from U.S. ports choked waterways and docks, making matters worse.
There is also a global shortage of ocean freight capacity -meaning there aren’t enough ships. Add chokepoints at U.S. ports where trucks wait for hours to be loaded, and the stymied logistics of sending empty containers back to their origin to be refilled -all using dock space. The backlog on the docks further slows delivery and many ports still have inadequate operating hours to gain ground.
All these vulnerabilities impact a global supply chain that is based on “just-in-time” delivery -a method of keeping costs down by shipping products as you need them and using the mode of transportation as a warehouse during delivery.
What does this mean to Central Oregon businesses? Those who have been able to source locally have an advantage. It may cause us to consider where we get parts and products in the future. But often there is no choice but to go overseas. Some businesses have hoped to escape supply shortages by planning ahead and buying more and earlier than needed. Also, consumers have taken to hoarding, further exacerbating shortages.
There is good news. The newly passed federal infrastructure bill will invest in port expansion and added shipping capacity. But the tougher issue goes back to labor shortages – including finding truck drivers, pilots, and railway workers to fill positions in transportation.
Hopefully the worst of the supply disruption is behind us. As cargo log jams loosen, supplies will flow more easily. But until we address the labor issue it will likely be a stilted come back to normal. In the meantime, businesses will look for more localized sourcing, or plan ahead to keep our shelves stocked.