Supply chain ‘scramble' likely to continue into 2023

Although global supply chains are improving somewhat, they might not approach pre-pandemic quality until 2023 or beyond.

"We're still in the midst of a massive scramble—we'll be sorting through the pieces for the next couple of years," market veteran David Vernon said June 16 during a supply chain webinar hosted by law firm Benesch Freidlander Coplan & Aronoff of Cleveland.

When the COVD-19 pandemic hit in early 2020, demand came down after the first initial shock, added Vernon, a vice president and senior analyst with financial firm Sanford C. Bernstein of New York. When demand returned sooner than expected, manufacturers found they didn't have enough goods to meet demand and sometimes couldn't get workers in their plants when they wanted to restart.

Benesch partner Marc Blubaugh added that most market watchers "were bullish about 2020, but even those deeply invested didn't get [the pandemic] impact right … it was a black swan event."

Some improvements are already happening. Vernon said that shipping schedules from Asia have changed, with vessels now being slotted for arrival in Long Beach or Los Angeles when they depart their port of origin. Previously, those slots were based on arrival time. Railroads also are using embargoes to prevent too many rail cars from being in port areas at the same time.

"They're making changes to get more fluid … a freight buyer's primary objective is to move things. … They need to get products on shelves," he said. "But we're probably still going to see retailers marking down inventory and taking write-downs."

Blubaugh added that the Port of Virginia is using robotics to ease congestion. Trucking firms also are addressing pay issues and quality of life issues for truck drivers through shorter runs and additional parking locations. Last year, long-haul trucking gained market share from intermodal transport for the first time in 20 years.

Looking ahead, Blubaugh said that "the importance of the supply chain role has been elevated." Vernon agreed, saying that supply chain effectiveness "will be the mantra for the next decade."

"It's a good time to be in asset-based transportation," he added.