ShipRight
Drew Graham, ShipRight
Updated: November 1, 2021
Commentary
Commentary: Consumers are getting a window into ‘logistics’ challenges
By Drew Graham
Transportation and logistics issues used to be solely the concern of manufacturers, shippers, carriers and retailers. Now consumers have an increased awareness of how supply chain disruptions can impact their everyday lives.
The pandemic accelerated a broader understanding and appreciation of the connectivity of our world, for better and for worse. We all knew weather, labor strikes and pricing fluctuations affected trade, but now it was something entirely different. Things that used to just show up when and where we wanted them to now weren’t as easily available.
Consumer demand shifted dramatically from purchasing services to buying products. Trillions of dollars’ worth of inventory was depleted at the same time that global production was slowed or shut down.
A good example is the well-publicized effect this had on the automotive industry. It’s not just the lack of semiconductor chips, but parts and components across the entire build process. Prices have increased while availability has decreased, resulting in sparsely stocked dealer sales lots.
Online e-commerce became the buyers’ platform of choice as in-person store foot traffic slowed. That quickly tapped existing resources and led to panic buying of certain commodities, most infamously of course, toilet paper. Shortages led to frustration and more critically for many, food insecurity. The federal government responded with stimulus payments to businesses and individuals to keep the economy afloat.
Exacerbating the difficulties faced by employers looking for help to move products was the availability of unemployment benefits. Those extra payments, while well intended, kept many out of the workforce for an extended period. Even though those benefits recently ended, a good many of the continuing woes across the supply chain are still labor related.
With production slowly coming back online, ongoing labor shortages have resulted in a lack of port capacity. There are fewer dockworkers to unload freight, fewer truck drivers to move it and fewer distribution and warehouse workers to pick and pack it. There are also fewer delivery drivers to take it the final mile, to the consumer’s home or business.
What’s ahead
There are bottlenecks everywhere and it’s unlikely the supply chain issues will end soon.
Jerome Powell, chairman of the Federal Reserve, recently lamented that, “It’s frustrating to see the supply chain problems not getting better. In fact [they are] apparently getting worse.”
Supply chain issues in Maine mirrored much of the U.S. market. People stayed home more, invested in improvement projects, personal recreation, boats, bikes and takeout meals. How we worked, learned, interacted and supported each other all changed. We also shopped more online, and like the rest of the country, experienced shortages and price increases in products across the board.
Retailers are now stocking shelves for the holiday shopping season. The last quarter of the year is known as peak season in the logistics and supply chain world. Peak season occurs when demand quickly outstrips inventory, so additional stock and transportation is needed to satisfy consumer need and prevent a backlog. It’s already apparent that shippers don’t have the inventory in place to handle peak season this year, so it’s likely many products will sell out early again because of all the delays.
The good news is there’s an enormous incentive to make supply chains work smoothly again, establishing new levels of consistency and predictability. Trends like artificial intelligence, increased automation, cloud-based software, constantly improving visibility and the development of a circular supply chain with less waste and more efficient use of finite raw materials, will all contribute to eventually solving these issues. In the meantime, my advice is to be patient, plan ahead and shop early.
Drew Graham is president of South Portland-based ShipRight, which handles order fulfillment, contact center services and final mile delivery.
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