Patrick Penfield, a professor of practice in supply chain management and director of executive education at the Syracuse University Whitman School of Management, offers a view into supply chain congestion, delays and pricing for the remainder of this year.
It’s going to be “a very difficult fourth quarter,” says Penfield. “Everything this year just seems to have gone wrong.” There simply isn’t enough capacity to meet the surge in demand for product, which will only be amplified by the holiday shopping season.
Anticipating the crisis, many merchandisers brought in goods from Asia earlier this year than normal, but they will still be challenged to get sufficient amounts of product onto store shelves in time for the holiday rush.
The biggest bottleneck remains ports, particularly in Los Angeles and Long Beach, where dozens of giant containerships wait offshore to unload their goods. But the congestion also extends far inland, affecting railyards and intermodal transfer points. Exacerbating the situation is a shortage of both trucks and drivers to handle over-the-road shipments.
Meanwhile, China and other parts of Asia are suffering the effects of the Delta variant of COVID-19, forcing the closure of major ports and production facilities. “We don’t see enough ships coming over, and when they do, U.S. ports can’t handle them,” says Penfield. “It’s just an ugly mess.”
The first quarter of 2022, when demand is expected to taper, could offer some relief, but Penfield also worries about the possibility of a strike by West Coast longshoremen, whose contract expires in July. “A third of what’s brought in from Asia comes through those ports,” he says. “If they strike, then all bets are off.”
Some importers are finding workarounds by utilizing smaller ports, but that strategy requires more and smaller ships, Penfield notes.
Timely, incisive articles delivered directly to your inbox.