Opinion: Growing list of variables facing global supply chain
AUGUST 18, 2021
BY GENE KEY | THE DAILY MEMPHIAN
When asked about the state of logistics and transportation today, I drill it down to the basics: Our industry is a classic exercise of supply and demand.
Some would say we’re currently facing “off the charts” demand. Such high demand is due to the growing list of variables facing the global supply chain today.
First, we are experiencing importer pandemic effects. Every few weeks, it seems as though there is a ripple effect in the global supply chain due to yet another black swan event.
For example, the six-day shutdown of the Suez Canal impacted vessel schedules for weeks afterward. The Port of Yantian’s COVID outbreak in May prompted a three-day shutdown and limited port workforce for days after, causing many vessels to reroute to other Chinese ports, which created more congestion.
Here in Memphis, the Hernando DeSoto I-40 bridge took months to reopen after shutting down on May 11 – and to those who wonder if it is a big deal outside of Memphis, it still is. Ocean and rail carriers were forced to reduce what they shipped in and out of Memphis as a result of the standstill.
An event that is seemingly so isolated can become astounding in its impacts.
On the other end of the supply chain, we’re experiencing consumer pandemic effects. While summer spending and the “back to school” push are historically known as “peak seasons” in our industry, we’re also seeing a post-pandemic increase in consumer spending. Some hypothesize that consumers are purchasing more goods now after saving during a virtually nonexistent year of leisure travel.
Further, as the proximity between end-of-summer and holiday spending prompt an immediate pinch point, we wonder how paused unemployment benefits will impact holiday shopping this year? Will the rush of holiday shopping fall in line with projections or, yet, again, will an unforeseen scenario unfold?
I believe our current situation is temporary, but it will likely remain through the end of 2021 as we rebuild inventories and reestablish routines.