What isn’t wrong with the supply chain?
Port congestion, shortages of containers and truckers, and fleets that need updating — the constraints placed on the nation’s supply chain are easily identified, but slow to remedy.
A Wall Street Journal article yesterday pointed to trucking companies’ plans to significantly increase spending on new vehicles and trailers with the reality check that the suppliers that produce them may not be able to meet demand in a timely enough manner.
Old Dominion Freight Line plans to increase its capital expenditures 50 percent this year, spending 79 percent more on tractors and trailers. J.B. Hunt Transportation Services is increasing its capex spending to $1.5 billion, up from $877 million last year. Most of the company’s spending will go toward tractors, containers and other equipment needed for the large truckload and intermodal operator to move goods for their customers.
Truck parts, the Journal finds, are in short supply. Don Ake, vice president of commercial vehicles at FTR Transportation Intelligence, told the paper that manufacturers will fall short of meeting demand this year and will not catch up until 2023 at some point.
Even if new trucks and trailers are ready to roll, companies continue to deal with getting drivers behind the wheel. The American Trucking Associations has pegged the driver shortage at 80,000 at present and expects that figure to double before the 2020s are over.
Port congestion, which was an almost daily part of news headlines in the run up to Christmas, remains a factor across the U.S., although pressure is expected to ease somewhat in 2022.
The National Retail Federation is not expecting to see a significant increase in imports this year, but volume will be up in 2022. The group’s monthly Global Port Tracker forecasts that the nation’s ports will handle 13 million 20-foot equivalent units during the first half of the year, up 1.5 percent year-over-year. The first half of 2021 saw a record 35.7 percent increase.
“Last year set a new bar for imports, and the numbers remain high as consumers continue to spend despite COVID-19 and inflation. The slowdown in cargo growth will be welcome as the supply chain continues to try to adapt to these elevated volumes. Unfortunately, many experts expect ongoing disruptions throughout 2022 for a variety of reasons,” Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation, said in a statement.
- Truckers Face Supply-Chain Hurdles to Fleet Upgrades – The Wall Street Journal
- Port Congestion Spreads Across More U.S. Import Gateways – The Wall Street Journal
- Congested Retail Ports to See Welcome Break From Rapid Import Growth During First Half of 2022 – National Retail Federation
- Can retail make its trucker numbers add up? – RetailWire
DISCUSSION QUESTIONS: When do you expect supply chain disruptions to end and what will it take to make that happen? Are there actions that retailers and brands can take now to minimize the impact?