An inside look at how upcoming events and new initiatives may shape the supply chain, logistics and transportation environment in 2022.
If there’s one thing that all shippers learned in 2021, it’s that supply chain shortages, transportation capacity crunches and logistics snarls don’t always right themselves easily. As we move through the fourth quarter and start looking to 2022, the pandemic-related challenges are expected to continue but there are also some opportunities arising out of the turmoil. Shippers will want to keep an eye on these opportunities as they lay out their plans for the coming year.
Port Congestion: Any Relief in Sight?
Port congestion was a particularly sore spot for shippers in 2021. As of mid-October, 62 container ships were anchored off the coast of southern California — 37 of them destined for the Port of LA and the other 25 destined for Long Beach.
Those ships contained the equivalent of about 200,000 20-foot containers, according to CBS. With an average waiting time for ships to dock at port of about 10 days, many of the unloaded containers sat at the port for a week or more before moving onto the next leg of their journeys.
To help speed things along, President Joe Biden recently proposed a 24/7 supply chain operation for the ports of Los Angeles and Long Beach plus some large retailers, carriers and logistics providers.
Usually open during the week and then closed at nights and on weekends, these two important ports will now be open more than 60 additional hours every week. This will nearly double the amount of time that the port is usually open during more “normal” operating circumstances. “This is the first key step toward moving our entire freight transportation and logistical supply chain, nationwide, to a 24/7 system,” Biden said in a recent briefing.
Of course, a container ship’s unloading is just one step in a lengthier import process. “The container goes into the port terminal, is then moved to a truck or chassis, and over to a distribution center,” said Glenn Riggs, President of Centerboard.
“All of these lines in the supply chain are also full right now,” he pointed out, “so changing the port hours alone may not be enough to get everything synchronized enough to make much of a difference.”
Chinese New Year is Coming
Two major events may help assuage some of the supply chain congestion this year: Chinese New Year and the Beijing Olympics. And while the relief may come in the form of the typical January/February work stoppage (for Chinese New Year) and the diversion of resources (for the Olympics), both could be beneficial for the current supply chain disruption.
“For Chinese New Year, all production in China shuts down for two weeks,” said Riggs. For 2022, this will take place loosely between February 1-15, although the actual event may extend for a longer period of time.
“During a ‘normal’ year we’d see a surge of pre-ordering to get orders flowing in before the shutdown, to cover the inventory outage,” said Riggs. “This year, the outage itself may help clear up some of this backlog.”
For example if the flow of ships from China to the US is temporarily halted, it may give the anchored ships and ports time to work through the current pipeline. This, in turn, may create some additional fluidity in the transportation environment—something companies have been hoping for all year.
With the Beijing Winter Olympics overlapping the Chinese New Year and taking place from February 4-20, expect the country to take actions like restricting traffic or even shutting down its northern seaports. “We’re not really sure how that’s going to play out yet,” said Riggs, “but that’s definitely another event to keep an eye on.”
Better Decision-Making
With these two events on the near horizon, shippers should be building as much lead time as possible into their orders right now, and particularly due to the extra dwell time that the anchored ships are causing in the supply chain. “Port congestion is and will likely continue to be a real issue over the coming months,” said Riggs, who urges shippers to work with logistics providers that have access to many different carriers and good visibility into the spot market, both of which Centerboard excels at.
Centerboard is a transportation management system (TMS) that shippers can use to connect with, obtain rate quotes from and orchestrate their freight movement on. With a centralized database to work from—and good visibility over that data—shippers can make better decisions in the heat of the moment, and regardless of current supply chain conditions.
