CUYAHOGA FALLS, Ohio—It may be complicated, and it even may be confusing, but it all comes back to one simple truth: There's only so much room on ships, trucks, planes and trains.
And if you need some of that cargo space, you're going to have to fight for it.
"This chaotic market is not going away soon," Matt Angell, vice president of logistics operations for Jarrett Logistics Systems, said during a presentation given as part of the Healthcare Elastomers Conference, organized and hosted by Rubber & Plastics News.
Globally, businesses—regardless of end markets—have dealt with hiccups before. Supply chains were flexible and adept enough to manage supply shortages and bottlenecks. But they weren't prepared for COVID-19.
The pandemic, Angell said, was different because it impacted the entire world—every supplier, every manufacturer in every geographic region—at the exact same time. Global manufacturing and shipping didn't just slow, in many cases, it stopped.
And that's the root of the problems faced today.
"As production and demand for most items quickly began to drop in the second quarter of last year, the transportation industry quickly began to cut costs," Angell said. "Large transportation carriers quickly began furloughing up to 50 percent of their drivers, dock workers and office staff, reducing transportation capacity in the United States by nearly 40 percent by the end of April."
When goods began to move again, those same transportation services were not positioned to handle the surge in demand. What resulted was a domino effect of capacity strains. Domestically, rail/intermodal quickly reached capacity, so freight was shifted to the trucking industry, which quickly was overwhelmed, especially as rest stops and truck stops remained closed.
When companies were positioned to recall workers, they still found themselves short-staffed. Many workers chose not to immediately return either for safety reasons, childcare concerns or the value of the unemployment benefits.
To help address employment shortages many companies have offered wage increases. Major trucking companies, for example, raised base pay to $75,000 per year with top pay scales at more than $100,000 annually. Signing bonuses of up $10,000 also are becoming the norm.
Even now, the industry still is struggling to keep up.
International shipping channels remain clogged as dozens of ships remain anchored in ports, waiting to be unloaded. In Los Angeles and Long Beach, Calif., the number of ships at berth and anchored are at all-time highs, according to Angell, who noted the issue is not unique to California. Ports in Texas, New York, New Jersey and other Eastern ports remained log jammed.