Let's start with production at Asian factories.
• The countries our businesses have outsourced production to have outsourced work to other countries
• China has outsourced component parts to Indonesia and Vietnam, and delta has caused many slowdowns
• Fewer components from Indonesia and Vietnam = fewer finished products in China
• Chips aren't the only shortage; two Japanese factory fires have reduced output of circuit boards and sensors
Those are just some manufacturing problems. Here are the shipping problems.
• China closed Ningbo, the world's third-busiest container port, for two weeks when one worker tested positive
• Shipping container costs from Shanghai to LA soared from $1300 in February 2020 to $7800 in August 2021
• Bidding wars to secure space on cargo ships has led many exporters to cancel shipments
• A MAJOR problem: There aren't enough shipping containers for North American and European routes
• A glut of shipping containers are abandoned in less lucrative ports and rail yards in South America and Africa
Then there are dockside, stateside challenges.
• The coronavirus has reduced the number of longshoremen
• There is a high volume of imports coming in at LA and Long Beach but fewer workers to unload cargo quickly
• Consequently, cargo ships sit off the coast for a week or more
• If ships can't be unloaded in a timely manner, firms will cancel voyages and no products get delivered
• That also means empty cargo containers aren't being fed back into the system, compounding problems
Trucking also took a hit. Its hiring problems existed before the virus, but the virus has made things worse.
• Domestic shipping faces a trucker shortage, with there being 80,000 fewer drivers this year vs. 2020
• Truckers are aging out, too, with 25% of all drivers being at least 55 years old
• Since COVID-19 hit us last year, there has been a 40% decrease in driver training
• Driver training classes are either smaller (for student/teacher safety) or licensing schools have shuttered
• There were 14 million job openings for drivers in 2019, before COVID-19, but only 1.9 million hires
• Fewer drivers = fewer goods moving overland to warehouses and store shelves
Lean Six Sigma, with its just-in-time delivery, was hit in its Achilles heel. Companies found out the hard way that Lean only works if manufactured products and their components are readily available — which they are not, due to the spread of the virus and its impact on the global supply chain.
There is no quick fix to ending supply chain problems.
Shipping firms will have to pick up all those empty containers in the southern hemisphere, but they're making bank on what they have — so long as their cargo can be offloaded in a timely manner in our west coast ports. Schools and trucking companies need to train and hire a lot of truckers stat, but that's clearly not in the cards. And companies should spend more on inventory to build resiliency into the system (and maybe move production back to the states) — however, that requires many tigers running large businesses to change their stripes.
The root of the global supply chain breakdown, though, is the virus. We can't tackle individual issues with the supply chain unless everyone in the world is vaccinated as soon as is practicable. But how the vaccines are distributed and administered is yet another supply chain challenge.
= new reply since forum marked as read
, so we'll be up to bat again November after next.
