No one ever said supply chain management was easy. Then again, no one ever imagined it could be this hard either.
The past 18 months have shattered all expectations for every aspect of supply chain management — from demand planning and procurement to manufacturing, logistics and last-mile delivery. And even where there is a silver lining, concerns are growing that backlogs in the supply chain might be holding certain sectors back.
Citing Institute for Supply Management and IHS Markit data, Yahoo Finance reports that the U.S. manufacturing sector has continued to grow through a year of global pandemic. And while 12 months of growth for manufacturers is a good thing, experts say the sector is being held back from even better performance by a lagging supply chain further upstream.
“Record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy,” says Timothy Fiore, ISM’s business survey committee chair.
Others agree that the external forces slowing down manufacturing are raining on the parade. Not only are these constraints limiting big opportunities for U.S. businesses, but manufacturers across the globe.
The Financial Times reports that, while the pandemic has brought about a resurgence in cycling, bicycle manufacturers are still struggling to keep up with the demand. And similar to the situation in the U.S., the issues for bicycle makers are happening further upstream.
Manufacturers are facing up to 400-day lead times for components from Shimano, the world’s largest supplier of bicycle components such as drivetrains, brakes and other critical components. Shimano, which owns about 65% of the global bicycle component market has reportedly cut deliveries by up to 80% as it ramped up production. Experts do expect demand to go back to normal levels sometime next year, but until then, global bicycle manufacturers and their suppliers are working overtime.
We often talk about the fragile balance between supply and demand. However, the equipment we use to move freight across the globe is anything but delicate.
It makes the footage captured of a collapsing container crane at Kaohsiung port that much more dramatic. One was injured this week when a dockside gantry crane came crashing to the ground at Taiwan’s largest harbor. Additionally, two engineers who were trapped inside the collapsed crane had to be lifted to safety by a 60-meter jib crane onsite.
Taiwan News reports the collapse came after the Orient Overseas Container Line vessel Durban veered off course and collided with the Yang Ming vessel YM Constancy, ultimately making contact with the crane.
Certain pockets of the world are starting to open up as COVID-19 vaccinations become more widespread and the pandemic slowly starts to come under control. But we’re not out of the woods just yet.
Seatrade Maritime News reports that two major alliances are dropping calls at one of China’s busiest ports as recent outbreaks and extra precautions have given way to increased congestion. The carrier alliances, which include Maersk and MSC’s 2M Alliance as well as THE Alliance, comprising ONE, Hapag-Lloyd, Yang Ming and HMM, are reducing calls at Yantian in the short term.
As of Thursday, more than 40 container ships were waiting outside of Yantian, which handles more than 13 million TEUs annually, Reuters reports. The terminal has been under COVID-19 restrictions since May 21, when cases were identified among workers, setting off strict disinfection and quarantine measures.
One if by land, two if by sea, three if by, um, tornado?
Let’s face it, 2020 was a difficult year for just about everyone. But beyond the novel coronavirus pandemic that reared its ugly head last year, global supply chains also faced the wrath of mother nature. Supply Chain Dive takes a look back at what was a record year for natural disasters that only exacerbated the problems shippers, LSPs and carriers faced throughout 2020.
All told, there were 22 weather and climate events that cost at least $1 billion in 2020, far surpassing the previous record of 16 that was set in 2017. And while adapting to and overcoming disruption is the name of the game for successful supply chain operations, these types of disasters often have an outsized effect on logistics operations that depend on air, ocean and land to move freight.
Even the best-prepared operations are still subject to unplanned events, many of which can shut off access to certain regions, resources and customers for anything from a day to several weeks. The article is a reminder that, even in the most difficult of disruptions, logistics is expected to find a way to keep businesses moving and help out human lives. Preparation goes beyond scenario planning and visibility — it also depends upon speed and access to information about changes and the ability to collaborate with service providers to find the best way to get goods where they need to be.
Look, we’re not saying the supply chain is cool or anything. It’s just that all of a sudden more people know what it is and care that it works. Especially when it comes to product availability and on-time delivery for essential (and non-essential) goods.
In a year where we had to drop everything and stay home as much as possible, consumers have put a lot of faith and pressure on the supply chain. As Journal of Commerce editor-in-chief Peter Tirschwell writes in The Wall Street Journal, that increase in demand has resulted in a massive amount of stress on global logistics networks, as an outpouring of imports is routed from overseas markets through a limited number of vessels, containers and ports.
And if you were hoping it was just a phase, the idea prevails that maybe this is a long-term challenge. Especially for U.S. ports, which did not rank too highly in the global Container Port Performance Index released by World Bank and IHS Markit last month.
If we’re going to see slack come back, it’ll take more than just an end to the pandemic, but a concerted effort from all parties to evolve not just the infrastructure of our global supply chains, but productivity and efficiency of employees along the way.
Thanks for stopping by, folks! Happy Friday! Don’t forget to check out last week’s news and come back next week for the following Friday Five logistics news roundup!