Will 2022 be the year that supply chain congestion finally gets resolved?

Experts say: Not likely.

Most of us were hoping that 2022 would bring much-needed easing of supply chain backlogs. In particular, the break for the Lunar New Year – where workers in Chinese ports and warehouses return home – was seen as an opportunity for US distribution channels to clear some of the cargo that’s been building up at ports. Enter the latest Omicron variant and now we have new challenges to an already-stressed system.

First, let’s take a look at how we got here.

The First Stressors On The Supply Chain

The US Bureau of Labor Statistics noted in 2021 that there were 33,000 fewer truck drivers than before the pandemic. New drivers weren’t being trained and certified fast enough due to covid restrictions. Add that to increased shipping demand from home-bound consumers, and you have the first pain point in the supply chain.

At US Ports, which are the point of entry for most goods, covid-forced closures also had their effect. Ships were sailing idly waiting to be unloaded, and containers were sitting on the dock with no one to transport them away. The Baltic Dry Index, used as an indicator for shipping capacity, hit record-level highs.

From shippers dealing with exorbitant rate hikes to customers facing out-of-stock items, the importance of a well-running supply chain soon became apparent.

But There Were Some Positive Outcomes

As is often the case with adversity, positive outcomes have occurred. Supply Chain inefficiencies, which were not unknown to supply chain managers, have been exposed and elevated to the executive level. Long sought-after technology and process improvements are now being prioritized.

Manufacturers are looking at alternative inventory solutions, as they look to avoid port delays. Everyone being in the same boat means a greater willingness to work together in new ways.

Shippers have radically increased their usage of third-party logistics services providers. Whereas previously there was security in long-term contracts, the current volatility of the market requires quick pivots. 3PLs and freight broker specialists have stepped up to the plate and helped alleviate some pain points for shippers.

How Do We Thrive This Year?

Economists were already warning that supply chain pain would need time to recover. That was before the Omicron variant. With China going into significant lockdowns, and potentially further increasing port delays, the supply chain looks to be under pressure for a while yet.

There’s no denying that 2022 will continue to be challenging for producers, carriers, and customers alike. Manufacturers want to avoid permanently losing disappointed customers with products remaining out of stock. Yet they need to balance that against over-supplying after customers have already moved on to something else. Fleet managers want to avoid driver fatigue and burnout.

Creative marketing and responsive customer service remain a priority for manufacturers and retailers. Supply Chain visibility and access to data at all points of the delivery process are now vital. Those who are willing to work with external suppliers, embrace investment in technology and increase supply chain visibility will be well-positioned for the recovery.

Key takeaways for 2022:

Businesses continue to need to pivot.

Get creative with marketing and packaging as prices continue to rise.

Embrace new technologies.

Partner with 3PL for greater flexibility.