Dec 03, 2021

Port Congestion Update (Part 6): Supply Chain Outlook in 2022

west coast port congestion image

In our ongoing blog series about coastal port congestion, we have been unpacking multiple issues causing this crisis and the impact rippling across the supply chain. Then, in the last post, part 5, we explained how supply chain issues will affect most businesses, consumers, and ultimately holiday gift-giving this year. In part 6, we identify some key trends and predictions for supply chains in 2022.

Ongoing Supply Chain Issues
With no relief in sight, ships continue to sit idle in port waters for days on end waiting to unload their goods. In spite of ports operating around the clock and shipping throughout the night, labor shortages and lack of warehousing make delivery delays commonplace. And, as the holidays quickly approach, consumer demand outpaces supply, causing shipping rates to skyrocket.

How Manufacturers are Gearing Up
Many companies are taking precautions to combat the volatility and continued supply chain disruptions expected to continue in 2022.

For instance, consumer-goods suppliers are decreasing product lines to simplify manufacturing and keep goods moving. They’re also expanding their sources of raw materials and components so they aren’t reliant on a single source.

Large industrial manufacturers such as auto makers are resetting assembly lines to combat materials shortages such as semiconductor chips. As an example, Ford Motor Co. is designing their production lines to allow substitutions of identical goods or materials when there’s a supply shortage. They’re also seeking multiple sources for components because they’re no longer able to rely on just one supplier.

Because of the interconnected nature of supply chains, there’s no easy cure-all to resume the steady flow of goods through the global economy. Some logistics experts say do not anticipate relief until the second half of 2022, while others believe the current situation won’t improve until 2023.

Backlogs and elevated shipping costs are likely to persist at least through the middle of next year because no immediate solution for the underlying supply-demand imbalance at U.S. ports is available. Ronnie Walker, Goldman Sachs economist in Entrepreneur MagazineBacklogs and elevated shipping costs are likely to persist at least through the middle of next year because no immediate solution for the underlying supply-demand imbalance at U.S. ports is available. Ronnie Walker, Goldman Sachs economist in Entrepreneur Magazine

What Logistics Experts are Forecasting in 2022

  • Demand returns to more normal levels
  • Supply improves as COVID diminishes
  • Demand for goods with computer chips will remain high
  • Supply of semiconductor chips will not catch up with demand
  • Younger, picky workers will return to work
  • Businesses will employ fewer skilled applicants and will need to train them
  • Wage inflation continues as companies increase pre-pandemic employee paychecks
  • Businesses invest in digital technologies to increase productivity and growth
  • Supply chain issues will remain until there are enough workers for trucking, port, and warehouse operations

Supply Chain Trends to Look For
Manufacturers and businesses are pivoting and adapting to combat the current supply chain issues. Since disruptions and shortages are expected to continue into the new year, we believe there are several ways that businesses will work toward building even more resilient supply chains. These include:

  1. Agility
    Being able to pivot faster; for instance, by increasing or decreasing production and creating new distribution channels
  2. Diversification
    Finding new or alternative sources for materials and/or modes of transportation to move goods
  3. Contingency Planning
    Focusing on demand planning and preparing for unforeseen disruptions
  4. Visibility
    Using supply chain technology and update automation capabilities to spot trends and prevent issues before they occur
  5. Focusing on Capacity
    Seeking alternate carriers and shipping modes to fulfill orders and deliveries rather than prioritizing timeliness and cost
  6. Warehousing
    Storing larger quantities of products and raw materials nearby to protect against shortages

In 2022, businesses that increase their supply chain resilience, visibility, capacity, and storage will have a greater likelihood of success and happier customers.

Want better visibility about where your shipment is and when it will get there?
EASE uses state-of-the-art technology backed by proactive updates from an EASE team member, which brings real-time visibility into every single shipment. Contact EASE to get real-time visibility into all your shipments. Email us at info@easelogistics.com. Or call 614-553-7007.

Wrapping Up the Blog Series
This is the last installment in our Port Congestion blog series. Our goal was to explain what’s causing the current supply chain crisis and to help you prepare for new logistics challenges. We also shared different trends and some ways businesses are adapting. Catch up if you missed any of the series, click here for part 1, part 2, part 3, part 4, and part 5.