Supply Chain and Logistics Trends Heading Into 2022
By Len Batcha, President and CFO
Technical Transportation, Inc
The year 2021 has certainly been dynamic and has no doubt been shaped by the fallout from the COVID-19 pandemic. From the economic strains caused by 2020’s lockdowns to the supply chain issues and port backlogs, the year has had its share of challenges.
Yet as we close out the year and start 2022, we look ahead optimistically, and hope that we – as an industry, as a society and as a global economy – will be better equipped to navigate any new developments or changes that may emerge in the coming months.
From where we sit right now, we see several primary trends emerging as we ring in the new year.
Supply chain issues at ports will improve
For the better part of the year, we’ve all seen images of the lines of container ships anchored off the West Coast, waiting for their chance to unload their goods. A lack of dockworkers and truck drivers – due to a range of issues stemming from COVID-19 mitigation measures and government stimulus – led to an unprecedented backlog.
As of today, we believe this backlog is beginning to improve and will continue to be resolved in the first half of 2022. In recent weeks, containers have been processed more efficiently and are moving through, and away from, the ports to their intended destinations.
This is great news as we head into the holiday shopping season, especially since many consumers and retailers kicked off Black Friday and Cyber Monday sales weeks in advance, anticipating potential supply chain delays and product availability issues.
The economy is making a rebound
Thankfully, the U.S. economy continues its v-shaped recovery following the COVID crash of 2020. Right now, it appears we’re in the midst of a sustained rebound, one that is even stronger than we anticipated.
Consumer spending is doing quite well, and in B2B vertical markets, we’re seeing lots of purchasing in industries such as healthcare, cash automation and retail technology.
In our part of the supply chain and logistics industry – we deal with a lot of technology and heavy equipment product manufacturers – we’re noticing a steady rise in requests for our transportation, delivery, white-glove and demo-move services. Given current indicators, we expect this reboot to continue well into next year.
Domestic Manufacturing/Warehousing to Increase Again?
The recent breakdown in U.S. supply chains has opened the eyes of many manufacturers, and many companies are adjusting their infrastructure to make sure they’re not caught off guard again down the road.
We’ve already seen manufacturers in some industries announce new factories and facilities domestically, and we think that trend may continue. We also think manufacturers may modify or shift away from JIT (Just in Time) and Six Sigma methodologies and choose to keep min/max levels of inventory on-hand in state-side warehouses to minimize future shortages like the ones we are now seeing.
At TechTrans, we’re experiencing a move towards more hub warehousing strategies by our clients in regional warehouses across the country that then feed to localized distribution centers for speedy delivery when products are ordered.
Recruiting will be important in 2022
This year’s supply chain issues were due in part to “The Great Resignation,” where many workers chose to stay at home due to bountiful stimulus checks provided by the U.S. government.
We believe this Great Resignation is coming to an end because the stimulus money is now gone from several large states, and people will be forced back to work. This alone will not solve the industry’s problem, however.
For many people, their approach to work has changed, and they want to (continue to) work from home. The supply chain industry, though, is a hands-on field that requires the physical presence of workers to get the job done.
Therefore, supply chain and logistics companies will need to consider this in their compensation packages to attract the best talent. That said, for those workers who still want to compete in a free market society, this is a great time to participate and to seize the opportunities available.
While we don’t hold a crystal ball and can’t always predict the future, by reading the signs of the times, we do believe that 2022 holds the potential to be a better year as we continue to rebound and emerge from the past two years of the pandemic. We wish you a happy holiday season ahead and a prosperous new year.
