by Joseph M. Joseph, Esquire, Dalko Resources, Inc
Hardly a day goes by where we are not bombarded with news about the dysfunctional supply chain. In 2021, shrinking capacity and lack of equipment have seen disruptions and delays in supply chains reach crisis levels in the United States and around the world, with a lot of finger pointing as to the cause. The cause is much debated, but more importantly, finding the optimal solutions have become increasing elusive. One thing is for sure, shippers should not expect the current crisis to end any time soon or that a return to “normal” will ever occur.
While some assert that the pandemic caused the current crises, most agree that it wasn’t the cause, but the catalyst and that a pre-pandemic cascading of events lead to todays near collapse of the global supply chain. Some of the causes attributable to the current crisis include, but are not limited to, the 2018 creation of ocean carrier alliances, China’s economic problems, container capacity imbalances, equipment shortages, port inefficiencies, California’s Air Rescue Board’s passage of regulations that wiped out half of the trucking capacity, passage of the ELD mandates that restricted US truck capacity and an antiquated domestic infrastructure. As a consequence demand is outstripping supply and pushing up spot market rates for east bound containers in excess of 400 percent in the just the past 12 months.
With all the disruptions, importers have been forced to make sudden and dramatic reconfigurations to their supply chains resulting in soaring costs and uncertain reliability. Most are holding out for a return to a cost efficient, seamless process while others believe the global supply chain is irretrievably broken. Regardless of which side of the proverbial half full or half empty glass of water you subscribe to, every company that relies on a global supply chain to get their products to market, must devote more resources across their organization to ensure that an intentional and deliberate approach is in place to minimize supply chain risks.
Risk management is an essential element of a high performing supply chain. If the current crisis has exposed shippers to anything, it should have revealed that gone are the days of where supply chain matters should be left to managers and absent from C level attention. Companies need to access data and insights that will help determine where deficiencies lie in their supply chain and where they could be headed, thus allowing for transportation costs to be adequately managed, service to be satisfactory and ultimately improved organizational performance. The time has come for companies to recognize the importance of partnering with a team that can see beyond supply chain hurdles and provide both short and long term strategies that add value and a competitive advantage.
Joseph M. Joseph, is General Counsel and Senior Executive Vice President of International Trade and Customs and Human Resources at Dalko Resources, Inc based in Sharpsville, PA.
Side Note: NWIRC will host a free 1-hour webinar featuring Atty. Joseph on December 15 at 8:30am, ‘Navigating Your Supply Chain in Today’s Environment’. Find details at www.nwirc.org/events.