Strategies To Solve The Supply Chain
While a recent announcement from the White House staff claimed that most severe supply chain bottlenecks in ocean shipping ports are now a thing of the past, data collected by the National Association of Chemical Distributors (NACD) indicates a different story. In an article penned by NACD president Eric Byer for RealClear Policy, smaller companies that import chemicals into the U.S. are still experiencing severe setbacks —despite larger retailers such as Walmart reporting improved inventories. In particular, 90 percent of NACD members reported averaging shipping days spanning 11 days or longer, 87 percent are experiencing stock outages, and 83 percent have reported revenue losses at the hands of shipping delays or lack of options for booking transit of goods.
While a Walmart can survive higher prices for shipping containers or limited options for transporting supplies by flying in cargo or chartering ships, smaller business have to consider permanent shutdowns when these obstacles persist for too long without solutions. 40-foot shipping container costs for Asia-U.S. West Coast and Asia-U.S. East coast are 169 percent and 190 percent more expensive respectively, year-over-year. With the average NACD member ranging from 20-30 employees, these elevated costs require a combination of creativity and change to the system.
For the past two years, the NACD has worked actively with the Federal Maritime Commission (FMC) and has recently become an active participant in the recently-formed National Shipper Advisory Committee. While these initiatives are beneficial for providing insight into industry challenges and sharing ideas, the real change will come at the hands of legislation reform.
More than anything, ocean shipping standards that condone the gauging of shipping container prices while ignoring standards for transporting hazardous cargo have left many smaller business in a bind.The recently passed Shipping Reform Act of 2021, however, should be instrumental in legitimizing the FMC’s ability to enforce laws, precent severe price rises, and improve the overall process for prosecuting violators. Combined with improving the infrastructure of shipping ports while also providing more support to shipping chassis and containers being manufactured in the U.S., and bottlenecks can occur far less frequently.
Along with overseas shipping complications, many parallels exist with trucking transportation of goods. Perhaps the biggest complication are laws that prevent commercial truck drivers from crossing state lines under the age of 21. This standard puts a severe barrier behind potential candidates to fill truck driver positions that are currently suffering from severe shortages. To resolve this, a pilot program has been launched by the Federal Motor Carrier Safety Administration to allow adults aged 18-20 to operate motor vehicles on interstate roads. This will hopefully lead to legislation that changes current guidelines and help replace retiring drivers.
On the rail side, the big issues stem from Class I railroads that are essentially monopolized, meaning the owners have the power to charge whatever they deem fit for cargo transportation. This can be resolved through improved support and organization of the Surface Transportation Board (STB), which is in place to evaluate reciprocity and commercial fairness issues.