Managing Global Supply Chain Disruptions: How Government Agencies and Businesses Can Mitigate the Impact of International Shipping Disruptions

This content is sponsored by Interstate Moving | Moving | Logistics.

The pandemic and other global events have prompted government intervention in the global supply chain, as the public faces massive product shortages and rising prices from the impact of shipping disruptions international. While the pandemic was the straw that broke the camel’s back, inherent infrastructure issues dating back to the 1970s helped set the stage for the current situation.

“In the 1970s, the ships of…

READ MORE

This content is sponsored by Interstate Moving | Moving | Logistics.

The pandemic and other global events have prompted government intervention in the global supply chain, as the public faces massive product shortages and rising prices from the impact of shipping disruptions international. While the pandemic was the straw that broke the camel’s back, inherent infrastructure issues dating back to the 1970s helped set the stage for the current situation.

“In the 1970s, the ships in play at the time were built during World War II and refurbished for use in international shipping applications. These vessels had a capacity of approximately 1,000 20-foot equivalent containers. Ships these days carry 25,000 containers on a single ship,” said Ruth Moritz, vice president of global relocation at Interstate International, Inc. “So the scale of what a ship can bring to a port has exploded over the years and port facilities have not grown at the same rate. That said, you see infrastructure issues in major bottleneck ports like Los Angeles, Baltimore, Charleston, Oakland, Houston, and New York.

This is accompanied by a generational change in the labor force and in attitudes towards certain types of work. Jobs as a truck driver, ship’s captain or stevedore are no longer considered desirable. They are considered manual labor with less flexibility than other types of labor. Health and work-life balance are also more important for young workers who want to be home every night.

“It’s just not cool anymore to be a truck driver,” Moritz said. “Today’s generation does not embrace this profession.”

Infrastructure deficits combined with labor shortages will force government agencies to start factoring in additional shipping costs when negotiating contract prices. Transportation costs have increased dramatically over the past 10 years, and government procurement specialists need to understand the market when issuing RFQs. If the price offered does not increase, transport companies will have to continue to be more creative in their solutions. It may also require agencies to be more flexible.

The current conflict in Ukraine is a prime example. This has led to the closure of many overseas ports in Europe, especially those in countries neighboring Ukraine, for foreign companies. This means that US shipping companies have to find alternative routes, whether it’s different ports or ground transportation.

At the individual level, she says, we need a better appreciation of the importance of the transport industry in its role in reducing the impact of global supply chain disruptions.

“While we may be frustrated with the number of tractor-trailers we see on a freeway when we’re on vacation and have to navigate I-95 South…if we have any idea what that truck is hauling or what it’s ‘t hauling when it’s not available, I think a lot of us might have a little more patience on the road when we see them,” Moritz said. “So, for example, if the United States went 24 hours without any kind of trucking – if trucking ceased – our country would see the delivery of medical and other supplies affected Hospitals would run out of basic supplies within 24 hours, gas stations would not would run out of fuel, retailers would run out of basics like toilet paper, etc. Just-in-time manufacturing would be compromised by a shortage of raw materials, US mail could potentially stop. expect to see food shortages within 24 hours.

These are the types of conditions that tend to cause consumers to panic and start hoarding, which only makes the situation worse.

“You saw it at the start of the pandemic with the shortage of toilet paper. Even though people didn’t need to stockpile toilet paper, they panicked and bought too much. So there was nothing more to be had,” Moritz said. “The essential would disappear. Things like bottled water, powdered milk, canned fruits, vegetables and meat. ATMs would run out of money; he gets there by truck.

Companies and government agencies can also help prepare internally for supply chain shortages, Moritz said. Cross-training staff better prepares the workforce to adapt to market ebbs and flows. Employees who can perform multiple functions are more valuable to an organization, which helps companies justify retaining employees if revenue is affected.

To this end, businesses must also avoid over-reliance on a single source of revenue. The effects of market imbalances can be mitigated through diversification. Otherwise, businesses could be forced to make tough decisions about whether to stay open.

“I think the one important thing to remember is just to be prepared for change. I think we all know it’s coming and even though we don’t all like change, we have to be prepared for it,” Moritz said. “You have to expect the best, plan for the worst and be prepared to be surprised because in an instant something can change and you will have to comply.”

Ashley C. Reynolds