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The pandemic and other world events have invited government intervention in the global supply chain, as the public deals with massive product shortages and rising prices arising from the impact of international shipping disruptions. While the pandemic was a final straw, inherent infrastructure issues that stem back to the 1970s helped set the stage for the current situation.
“In the 70s, the vessels in play at that time were constructed during the Second World War and refurbished for use in international shipping applications. These ships had capacity for about 1,000 20-foot equivalent containers. Vessels these days bring 25,000 containers on one ship,” said Ruth Moritz, vice president of global relocation at Interstate International, Inc. “So the magnitude of just what one vessel can bring to a port has exploded over the years and port facilities have not grown at the same pace. Having said that, you’re seeing infrastructure problems at key bottleneck ports like Los Angeles, Baltimore, Charleston, Oakland, Houston and New York.”
That’s paired with a generational shift in the labor force and attitudes toward certain kinds of work. Jobs like truck driver, ship captain or stevedore aren’t viewed as desirable anymore. They’re viewed as manual labor with less flexibility than other types of work. Health and work-life balance are also more of a factor for younger workers who want to be home every night.
“It’s simply not cool to be a truck driver anymore,” Moritz said. “Today’s generation isn’t embracing that profession.”
Infrastructure shortfalls combined with labor shortages will require government agencies to start taking additional shipping costs into account when negotiating pricing for contracts. Transportation costs have drastically increased within the last 10 years, and government acquisition specialists need to understand the market when they put out requests for pricing. If the offered price doesn’t increase, transportation companies will need to continue being more creative in their solutions. That may require agencies to be more flexible, as well.
One prime example is the current conflict in Ukraine. It’s caused many overseas ports in Europe, especially those in countries neighboring to Ukraine, to close for foreign business. That means U.S. transportation companies have to find alternate routes, be they different ports or ground transportation.
On an individual level, she said, we need a better appreciation of the importance of the transportation industry in its role in reducing the impact of global supply chain disruptions.
“As much as we may get frustrated at the number of tractor trailers we see on a freeway when we’re on vacation and have to navigate I-95 South…if we have an appreciation of what that truck is transporting, or what it isn’t transporting when it’s not available, I think many of us might have a little bit more patience on the road when we do see them,” Moritz said. “So for example, if the United States went 24 hours without any sort of trucking – if trucking ceased – our country would see delivery of medical and other supplies being affected. Hospitals would run out of basic supplies within 24 hours, service stations would no longer have ample fuel, retailers would run short on staples like toilet paper, etc. Just in time manufacturing would be jeopardized by a shortage of raw materials, U.S. mail potentially would cease. And you’d probably start to see food shortages within 24 hours.”
Those are the kinds of conditions that tend to cause consumers to panic and begin hoarding, which only compounds the situation.
“You saw that at the beginning of the pandemic with the toilet paper shortage. Even though people didn’t need to hoard toilet paper, they panicked and they over-bought. So there was nothing left to be had,” Moritz said. “Essentials would disappear. Things like bottled water, powdered milk, canned fruits, vegetables and meat. ATMs would run out of cash; it gets there by truck.”
Businesses and government agencies can also help prepare internally for supply chain shortages, Moritz said. Cross-training staff better prepares workforces to adapt to the ebbs and flows of the market. Employees who can perform multiple functions have more value to an organization, and that helps businesses justify keeping people employed if revenue is affected.
To that end, business should also avoid relying too heavily on any single revenue stream. The effects of market imbalances can be mitigated by diversification. Otherwise, companies could be left to make some difficult decisions about whether to remain open.
“I think the one important thing to remember is just to be prepared for change. I think we all know it’s coming and while we all don’t like change, we should be prepared for it,” Moritz said. “One should expect the best, plan for the worst and prepare to be surprised because in a single moment something could change and you will need to bend to it.”