Supply chain’s outlook for new year

HIGH POINT — When the coronavirus pandemic began in 2020, millions of Americans first began buying necessities like toilet paper in a frenzy. Then, stuck at home as the world shut down, they spent what would have been vacation money on things for the house.

Shortages in lumber, microchips for electronics, aluminum and other items worsened, with seemingly no end or solution in sight.

Even now, as the pandemic seems to be waning and people have largely returned to work and normal life, these supply issues still don’t seem to be letting up.

“One thing has become painfully apparent: A shortage of anything anywhere affects the production of everything everywhere,” said Massood Logistics President Edward Massood. The company offers 3PL logistics services and specializes in the handling and delivery of home furnishings.

“Consider upholstered furniture. This item requires wood frames, steel and foam,” said Massood. “If the fabric comes from Vietnam and the wood ships from Brazil, with steel coming from coal fired plants in China, then you have an order backlog totally dependent upon any one of these critical raw materials. Every supplier is dependent on every other supplier to meet commitments and delivery dates.”

Name the culprit

Experts point to a litany of problems as the causes for the shortages and backlogs: Cargo ship bottlenecks, a lack of dock workers at ports, rising fuel prices, the three-month-long blockage of the Suez canal, sky-high demand and, perhaps most notably, a tremendous shortage in trucks and truck drivers.

Aaron Nussbaum

“I think the biggest challenge is continuing to find workers/drivers and securing trucks and trailers since order lead times are so far out into the future,” said Aaron Nussbaum, director of logistics at GoJarrett, a nationwide supply chain and logistics company.

GoJarrett operates two divisions for the furniture industry: Jarrett Trucking and the final mile white glove firm RiteRouting by Jarrett.

“We have done sign-on bonuses, employee referral bonuses, and increased wages,” Nussbaum said. “We haven’t had issues retaining drivers/warehouse workers; it has been more about needing more because of all the growth we have experienced throughout 2021.”

Shailu-Satish-Headshot

Shailu Satish

“Even before COVID-19, there was a driver shortage, and the pandemic only exacerbated the shortage issues further,” said Shailu Satish, co-founder of DispatchTrack, a software provider for logistics firms.  “Hiring a new driver, training them, getting them background checked, etc., takes time.”

Satish is right. A report issued in October by the American Trucking Assns. estimated that the industry is short 80,000 drivers, a number that could double by 2030 as drivers continue to retire.

Young people don’t appear to be getting into the industry fast enough. The average age of a driver is 47 according to career tracker Zippia, and that number appears to also be rising.

Nussbaum thinks these issues have been aggravated by the pandemic.

“I think quite a few drivers decided to retire throughout the pandemic,” he said. “Another issue is CDL schools, which are so backed up and understaffed that it is hard to get your CDL today in a timely manner. Finally, I think the last issue is finding enough trailers and trucks in order to have enough equipment to bring on board more drivers.”

The big question is what can really be done to resolve the labor shortage. Higher wages? Better benefits? A bigger push to the trades on young people? Automated trucks? Maybe just wait until the demand for products fizzles out. Or perhaps the shortages will take care of themselves as world returns to normal.

The answer remains unclear.

Issues at ports

Driver shortages are obviously not the only issue.

According to Massood, more than 5,000 container ships are on the water right now, with many sitting idle outside major harbors while ports cope with COVID-19-related outages, labor issues and, again, a shortage of trucks and drivers.

The Biden administration announced that it would take steps to ease these issues, notably that major ports would move toward 24-hour operation. Ports would also be allowed to redirect other federal funds to help.

But even if ships and ports get offloaded, labor issues and trailer shortages will once again make themselves known, as those goods still must travel by truck or train to warehouses and distribution centers.

A light at the end of the tunnel?

Logistics companies seem to agree that the situation will get worse in the short term, but that recovery will come. The question then is when.

chris randall, freight club

Chris Randall

“The supply chain situation will get better, eventually,” said Chris Randall, senior vice president of Freight Club, an intermediary logistics platform. “There is more pain to be seen in the short term, but steps are being taken by the government and the companies involved.

“We are confident that our carriers are working hard to onboard new drivers and support team members, and we do expect a drop in demand after the holidays which should relieve some of the pressure,” Randall said. “While the strains of the logistics industry will not go away after the holidays, we do believe there will be a small drop in demand and enough of a response from the carriers such that the labor situation will show improvement.”

James Liguori — director of branding and strategy for FragilePak, a nationwide logistics and delivery firm headquartered in Nevada, is also optimistic.

“We believe the labor situation will naturally move to a more active job market,” said Liguori. “Necessity is a great driver to find a job. We believe by mid-year 2022 the supply chain will start to normalize.”

But the prediction of mid-2022 could prove to be too optimistic. Ashley Furniture Inds. CEO Todd Wanek doesn’t expect the situation to improve until 2023.

In an October webinar with the Home Furnishings Assn., Wanek said transport, container, trucking and railing are all in bad shape.

“We’re having a hard time hiring truckers,” he said. “The shortage is worse than it was. Every part of the supply chain is a weak point right now.”

Wanek urged retailers to plan for at least four to six months of delays in dining room furniture and for at least six months in delays on wooden bedroom furniture.