Cloudy this evening then becoming foggy and damp after midnight. Slight chance of a rain shower. Low near 65F. Winds light and variable..
Cloudy this evening then becoming foggy and damp after midnight. Slight chance of a rain shower. Low near 65F. Winds light and variable.
The United States’ major ports have seen a spike in processing speed as their workers power through despite contract discussions.
Stores have been able to stock shelves more effectively after shipments have been arriving on time more consistently.
After extended issues with supply chain breaks resulting in late deliveries and empty shelves, some links in the supply chain have finally begun to mend, according to experts.
“I think that a lot of the problems that we saw with the supply chain that were happening last year are slowly working their way out. We’re seeing that in terms of more full inventories at some of these stores,” said Joe Bell, director of corporate communications for the Cafaro Co., which operates Meadowbrook Mall.
“Over the past few weeks this spring, the nation’s major container ports have worked very hard to reduce congestion and get retailers stocked back up on the shelves,” said Bridget Lambert, president of the West Virginia Retailers Association.
A major factor at the root of the change is the United States’ two largest ports in Los Angeles and New York recently going into overdrive to process incoming containers.
“The U.S. ports recently set a record for high volume movement while the West Coast labor contract talks continue. ... The ports on the West Coast handled 2.4 million containers in May. That topped the previous record of 2.34 million that was set in March of 2002,” Lambert said.
The United States’ major ports have seen a spike in processing speed as their workers power through despite contract discussions.
“Right now, the projected movement through the West Coast ports for July is forecast to be 2.31 million [containers], which would be the fourth busiest month on record,” she said.
Now that the ports are creating a steadier flow of items, businesses have been experiencing reduced wait times for their deliveries.
“The chain was severely broken during the pandemic because of holdups in the ports. Slowly that’s coming back, so we’re seeing some of those problems getting resolved,” Bell said.
“We don’t hear too often that we have retailers waiting a year for a shipment, but there are still delays,” he said.
Among the complications that remain, Lambert noted there is still an estimated deficit of about 80,000 delivery drivers.
Another complication: Although businesses are beginning to get more consistent shipments, sometimes it’s not necessarily the items they need.
This issue is rooted in the very beginning of the pandemic as consumer patterns changed drastically.
“If we go back to the pandemic, we have consumers who were stuck at home and given a bunch of cash by the government in stimulus checks. Because of that, they drove a sudden spending pattern that was a little bit different and not the norm,” said John Saldanha, Sears chair in global supply chain management at West Virginia University’s John Chambers College of Business and Economics.
“Everybody was stuck at home; they couldn’t go out to eat; they had all this cash; they were working from home. They needed to set up their homes as a workplace, so a lot of people invested in furniture and office equipment and computers and other electronics,” Saldanha said.
This push for items that weren’t typically in such high demand created a holdover that resulted in retailers ordering some items to excess.
“That (push) is also what took away from the spending in services, travel and other recreation and leisure items outside the home. That holdover is what you will see in the data if you are a retailer or a manufacturer. You will go back and say, ‘Oh, my item did well, so I would expect the consumers to continue to spend on these items,’” Saldanha said.
“Unfortunately, you have this double whammy where retailers are trying to purchase these items, manufacturers are trying to manufacture these items and, of course, there is a finite supply in terms of raw materials that can go into these items,” he said.
Now that demand has slowed down due to inflation, some businesses have been receiving deliveries on time more often while the ports work toward clearing out, but the situation is still not corrected across the board.
“You have an overabundance of certain items and a cooling off of consumer demand. So, therefore, it makes sense to me that you would see on-time deliveries because demand is down,” Saldanha said. “There is congestion in certain parts. If you look at Los Angeles and Long Beach ... you will see that there is still congestion.
“There are still problems emptying those ships out, and some of those problems are entering the rail transportation area as well. Because of that, you’ll see areas where there are still shortages,” he added.
Stores have been able to stock shelves more effectively after shipments have been arriving on time more consistently.
Companies are looking to adapt to prevent such situations from occurring in the future, experts said.
In particular, investments are being made in marketing strategies. Saldanha noted that smaller companies will likely benefit more from these in the short-term due to their higher ability to pivot compared to larger competitors.
“We’re probably going to see, optimistically, nine months to a year of corrections. After that, as long as we have this robust employment scenario, we should be able to come back,” Saldanha said. “I know that a lot of conversations are going on about what they would like to do.
“There are companies that have invested. Smaller companies are more nimble, more agile and they’re probably going to be the winners as they’re able to compete more effectively with the market in their segments,” he said.
Some companies are also looking to change suppliers in the future to avoid having to order from overseas markets.
“I think that there are retailers out there who are looking for suppliers or vendors that are more reliable. In other words, they don’t have to wait for something to be shipped from Asia or Europe,” Bell said. “They’re looking for more domestic suppliers. That’s going to take a while for some of them, but I think that that’s a problem that they’re trying to tackle right now.”
Other measures being made to improve shipping companies’ capacities include legislation being pushed by retailers to streamline the process for truckers.
“Our industry is working on government policy that allows drivers to get certifications faster, and we believe that re-evaluating the size and weight restrictions may also benefit us once it’s put through the policy process,” Lambert said.
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