The supply chain has struggled to overcome a seemingly endless stream of disruptions since the onset of a global pandemic at the beginning of 2020. For logistics professionals, COVID-19 has been similar to a never-ending game of Whack-a-Mole — as soon as one problem seems sufficiently dealt with, another always seems to quickly pop up.
Though supply chain and logistics professionals have begun to plan for a post-pandemic new normal, the logistics sector will continue to feel the impact of COVID-19 for some time to come. Here are some of the COVID-19 related challenges that continue to have an impact on supply chain and logistics operations.
Where’s My Container?
A little as 10 years ago, importers and exporters were faced with a growing container glut. Ports and shipping lines were selling off excess containers at rock bottom rates for creative repurposing as homes, offices, backyard sheds, and more. Now, the international shipping sector has the opposite problem — there simply aren’t enough containers to go around, with shortages expected to continue into 2022.
The container shortage relates directly to COVID-19. Retailers have been buying in larger quantities as they strive to meet higher demand spurred by a recovering economy. Unfortunately, ongoing port delays, higher average ocean container losses, and higher container usage have filled up the world’s limited supply of containers. Until delays begin to ease, and full containers get recovered from ships and ports for unloading, the container problem will remain.
Resiliency and Agility Over Cost
Most businesses have spent the last few decades paring down their supply chains to deliver goods as affordably as possible. Just-in-Time (JIT) inventory management strategies have been employed to reduce the cost of storing inventory longer than necessary. During the pandemic, however, businesses around the world realized very quickly how fragile their supply chains had become due to these cost-saving practices.
As a result of COVID-19, the majority of businesses have demonstrated a willingness to spend more if it will lower the risk of supply chain disruption. Measures for building better agility and resiliency into supply chains may include:
- Reshoring production or logistics assets to shorten supply chains
- Investing in technology to improve shipment visibility
- Carrying higher volumes of inventory
- Hiring a third-party logistics (3PL) partner to firm up supply chain capabilities
Capacity Issues Everywhere
The term “capacity shortage” has become all-too-familiar to any logistics, supply chain, or transportation stakeholder, with capacity issues plaguing multiple sectors:
- The industrial real estate sector continues to experience extremely low capacity due to the pandemic-fueled e-commerce boom and a few other trends, making it difficult for growing businesses to expand into bigger fulfillment centers near key markets.
- COVID-19 has made the trucking sector’s growing driver shortage even worse than it was pre-pandemic, and estimates had already showed a shortage of around 60,000 drivers near the end of 2019.
- S. seaports also have capacity problems, with ships often sitting at anchor for up to a week before they can get unloaded due to shortages of equipment and labor on the docks.
While most of these problems will continue to work themselves out as we move toward a post-pandemic future, they will undoubtedly plague the supply chain for the better part of 2021—and potentially beyond.
Get a Robot to Do It
Demand for automation technologies has taken off over the past year as logistics and transportation businesses seek to build more robust operations with a lower risk of disruption. In the face of labor shortages across the logistics and transportation sectors, warehouse operators have begun supplementing the workforce with robots. More than 50 percent of logistics providers say they will focus on automation to meet growing delivery demand. This year will also see the first automated trucks on the road with no operator on board. As businesses continue to seek ways to avoid disruption in the face of adversity, the popularity of automated capabilities will only grow.
About Phoenix Investors
Founded by Frank P. Crivello in 1994, Phoenix Investors and its affiliates (collectively “Phoenix”) are a leader in the acquisition, development, renovation, and repositioning of industrial facilities throughout the United States. Utilizing a disciplined investment approach and successful partnerships with institutional capital sources, corporations and public stakeholders, Phoenix has developed a proven track record of generating superior risk adjusted returns, while providing cost-efficient lease rates for its growing portfolio of national tenants. Its efforts inspire and drive the transformation and reinvigoration of the economic engines in the communities it serves. Phoenix continues to be defined by thoughtful relationships, sophisticated investment tools, cost efficient solutions, and a reputation for success.