Successfully navigating imports to North America requires diverse solutions and reliable partners with the ability to manage constant changes and disruptions in today's supply chain. Communication and collaboration with your logistics partners are critical to performance and meeting goals. We cannot rely on algorithms to make our decisions but rather have an analog mindset and treat each scenario uniquely as circumstances change.
Details matter and information is the driver for successful decision-making. As a distributor, we are looking at as many supply chain factors and trends as possible, the reasons behind them, how they may impact business, and how to mitigate the impact. Trans-Pacific Ocean freight is a compelling issue to diagnose with many adjacent factors; capacity, allocation, demand, equipment, labor, trucking, rail service, port capabilities, and politics, layered with unpredictable COVID issues.
- Capacity is expected to fall short of demand throughout 2022, as pressures continue to drive up costs. Shipping delays, physical shortages of containers and vessels, and positioning this equipment in the right location at the right time cause the greatest impact.
- Allocation is limited to cargo shippers as vessel companies try to manage supply constraints. More than ever, it is vital to have a combination of diverse logistics partners and carriers. This includes maintaining direct vessel liner contracts for consistency in cost and allocation, while holding close relationships with non-vessel forwarders for flexibility.
- Actual and potential labor shortages caused by COVID, pay, and union negotiations affect cargo movement and cause lumpy regional backlogs. Planning ahead and looking to alternate shipping and landing points can help to mitigate the impact if the situation becomes critical.
- Political and government intervention is more prominent today within the scope of supply chain issues. China’s implementation of strict COVID policies have caused more labor shortages and cargo backlogs. Once this loosens, the backlog will show up in the US. This flood of US imports may coincide with the West Coast port ILWU Union negotiation timeline – the Biden Administration may take a more active role in facilitating an agreement. US Congress is also moving forward with the Ocean Shipping Reform Act to hold ocean carriers more accountable on fees. Keeping an eye on these current and macro events help us pivot plans as necessary.
There is no one-size-fits-all answer for today's supply chain challenges, and the "right" solution today may be off-target next month. Individual scenarios dictate the strategic action required, while crucial timing, flexible decision-making, and the ability to pivot when needed while maintaining one's core values and long-term goals will set your course. Long-term relationships and supply chain diversity will continue to serve us well at TRI in 2022.
Our experience, agility, and attention to personal customer service are uniquely unmatched. We offer exclusive supplier relationships, industry market intel, and product knowledge with nationwide services, storage, and operations. We recognize your needs, understand your business, and are committed to solving your sourcing challenges and ensuring your supply chain is truly diversified. Diversity is agility and strength wrapped in one package.
Contact TRI today to learn more.