The COVID-19 pandemic lockdowns created significant disruptions to the global supply chain and freight movements around the world.
In the U.S., ports became congested, warehouse space filled up, and labor shortages plagued shippers and delivery services everywhere, curbing everyone’s ability to deliver goods in a timely manner.
As we near the second year of the pandemic, many of the supply chain issues continue to cause shortages. Only now there are measures in effect designed to alleviate the backups.
On January 19, Motive, together with Scopelitis Transportation Consulting, hosted a webinar on the State of the Supply Chain to share what’s being done to solve the supply chain crisis. The first in a three-part series, part one brought together two respected thought leaders from the transportation industry to share their expertise.
Avery Vise, VP of Trucking at FTR Transportation Intelligence, and Dr. Noel Hacegaba, Deputy Executive Director/COO at the Port of Long Beach, discussed the causes of supply chain challenges, the most pressing issues the transportation industry faces now, and what the supply chain will look like in 2022.
“Consumer spending isn’t the only factor behind this, but it is the biggest factor,” Vise said. “With an unprecedented government stimulus, and much less consumer spending on things like vacations, dining out, sporting events, and concerts, Americans have been spending record amounts on goods.”
At the Port of Long Beach, where Hacegaba oversees operations, Hacegaba’s team has felt the “seismic shifts” in demand and capacity. There are 2 billion square feet of warehouse space within 60 miles of the ports of Los Angeles and Long Beach, yet warehouse capacity is down to 1%.
“[The lack of warehouse capacity] has created an upstream situation that has resulted in record numbers of containers on terminal, record numbers of ships at anchor. And that’s really the reason why we are in the situation we are in,” he said.
The supply chain forecast for 2022
The level of consumer spending will be key in 2022, Vise asserted. Will it taper off gradually? Or will Americans suddenly decide they’ve spent all they want to and don’t plan to spend any more? Vise doesn’t expect Americans to suddenly stop spending. He is, however, excited to see what happens in the automotive sector.
“The severely depleted inventories in automotive are going to be a really big deal this year,” he said. “Because even if sales decline, even if consumers decide they don’t really need to buy another used vehicle, the automotive industry still has to produce quite a few vehicles just to get inventories back to up to a comfortable level. That’s going to be an upside, and [automotive production] is going to put a lot of pressure on driver capacity, assuming we get semiconductors.”
“Moving on to the big picture, I think 2022 is gonna look a lot like 2021,” Hacegaba added. “I don’t expect that we’re going to have record volumes. However, I think it’d be too quick to say that there’s going to be a massive deceleration. We’re going to continue to see imports come. Consumption is going to continue. And so 2022 I think is going to look a lot like 2021.”
To hear all of the expert analysis from Avery Vise and Dr. Noel Hacegaba, listen to the full webinar now.
Our Supply Chain Series continues! Be sure to register for part two, “Critical steps to digital transformation,” in February and part three: “How to pivot your workforce development strategy,” in March.