Most logistics managers from significant corporations and trade associations believe the supply chain will return to normalcy by 2024.
According to a poll by a media site, more than half of the managers, or 61%, believe the supply chain is not operating correctly. Meanwhile, 32% disagree.
Furthermore, when asked when they anticipated the condition to return to normal, around 22% were unclear, 19% indicated next year, and 30% stated it would be normal in 2024. Finally, the remaining 29% believe things will return to normalcy in 2025, with others believing it will never return.
The supply chain disruption that began around three years ago when Covid-19 started in Wuhan, China, has resulted in this pessimistic attitude among trade managers. Since then, the world has faced enormous strain and difficulty in rebuilding the economy of its countries.
However, rigid Covid rules across nations have hampered the cross-border interchange of products and services. Members of the American Apparel and Footwear Association, the Pacific Coast Council, the Agriculture Transportation Coalition, the National Retail Foundation, and the Coalition of New England Companies for Trade participated in the poll.
“The administration needs to remain focused and continue to convene the right supply chain stakeholders to discuss ways to improve supply chain operations and expand data sharing to create a truly 21st century supply chain,” said Jon Gold, the NRF supply chain and customs policy vice president.
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Government must cooperate with managers
Many managers, 59%, believe that the Biden administration should be aware of supply chain concerns. Managers, on the other hand, stated that sharing data between the government and logistics managers would benefit the supply chain. This would allow freight to move more quickly.
“The carriers have arbitrarily imposed such charges on customs brokers, even though we may not have had any role in booking or managing the transportation,” added Eduardo Acosta, Pacific Coast Council of Customs Brokers and Freight Forwarders Association president.
“The survey provides data supporting the imperative for the Federal Maritime Commission to advance its proposed rule to end this unreasonable carrier practice,” Acosta added.
“Hard data is the backbone of effective supply chain management, especially amidst the uncertainty shown in this survey. Intelligence about real-time cargo flows is essential. The survey highlights the need for the industry to rally around better data-sharing solutions,” said Karen Kenney, CONECT chair.
“Now is the time to double down on bringing all stakeholders together to create and implement real solutions to structural problems so that we don’t end up skipping from crisis to crisis,” said AAFA senior vice president Nate Herman.
Managers are dealing with problems
According to the majority of logistics managers, they need more raw supplies, which exacerbates their condition. Furthermore, port congestion, a labor shortage, and a reduction in warehouse capacity do not assist their cause. In addition, managers encounter other issues, including sailing cancellations, high costs, and tight terminal restrictions.
“US agriculture and forest products industries are being rendered less competitive in the global marketplace, driving inflation in domestic food costs,” explained AgTC executive director Peter Friedmann.
“The survey’s inventory of impacts of ocean carrier practices accurately reflects the experiences of AgTC membership – the agriculture sector nationwide. Detention and Demurrage Billing Practices determine the cost of exporting and importing a vast amount of goods crossing our seaport docks, and thus a significant driver of inflation,” he added.
For years, warehouses have been crammed with inventory due to the slowdown of American purchasing. When warehouse space becomes scarce, the cost of renting a space rises. As a result, warehouse costs have risen 400%, according to the management. As a result, many merchants offer lower pricing to consumers to clear up warehouse space for future incoming items.
“Customers are shopping discounts, and we are seeing that in the items we are moving. It’s the higher value products like tennis shoes over a lower cost t-shirt,” said DHL Supply Chain CEO Scott Sureddin.
“I have never seen inventory levels like this, and after the first of the year, retailers can’t continue to sit on this inventory, so the discounts they’ve been pushing will have to continue,” he added.
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The inflation in the country
Because of inflation in the United States, logistic expenses have risen even further. Companies must spend more on these services as energy and labor expenses rise. In addition, managers want assistance in managing the finances of supply chain organizations due to rising warehousing charges and other limitations.
Furthermore, the conflict between Russia and Ukraine hampered major worldwide markets and products such as wheat and grain. Regarding laborers, managers are becoming increasingly worried about their employees’ mental health amid a labor shortage, which can contribute to burnout and tension.
And now, as the holiday season approaches, some freights are experiencing delays getting into and out of states due to the winter storm. Many airlines and couriers have predicted delays as streets are covered in snow. Furthermore, some individuals have perished due to trapped government services due to impassable roads.
“International logistics is still a business driven by people. “The survey highlights all sorts of challenges in the supply chain, but none of those will get solved without the right talent and expertise,” explained Kenney.
Photo Credit: Deskera
Opinions expressed by CEO Weekly contributors are their own.