More than half of logistics managers at major companies and trade groups say they don’t expect supply chains to return to normal until 2024 or beyond, according to a new TBEN survey.
Sixty-one percent of respondents said their current supply chain is not functioning normally, compared to 32% who said it is functioning normally. When asked when they see a return to normality, 22% were unsure, 19% said 2023 and 30% said 2024.
Another 29% said in or after 2025, or never.
The bleak outlook comes after nearly three years of global supply chain troubles, which began with the shutdown of Wuhan, China, where the Covid outbreak began. Survey respondents said they still place orders six months in advance to make sure they arrive.
The study surveyed 341 logistics managers during the week of Dec. 12-19 at member companies of the National Retail Federation, the American Apparel and Footwear Association, the Council Of Supply Chain Management Professionals, the Pacific Coast Council, the Agriculture Transportation Coalition and the Coalition Of New England Companies For Trade participated in TBEN’s first supply chain study.
When asked if they thought the Biden administration understood supply chain challenges, 59% of respondents said no.
Jon Gold, the NRF’s vice president of supply chain and customs policy, said the administration has taken steps to address supply chain challenges.
Earlier this year, for example, the administration rolled out a pilot supply chain data sharing program called Freight Logistics Optimization Works, or FLOW. The Department of Transportation told TBEN there are currently 46 participants in the program.
“The administration must remain focused and continue to convene the appropriate supply chain stakeholders to discuss ways to improve supply chain operations and expand data sharing to ensure a true 21st century supply chain,” said Gold.
Eduardo Acosta, president of the Pacific Coast Council of Customs Brokers and Freight Forwarders Association, also stressed the need for more reform.
“The carriers arbitrarily imposed such charges on customs brokers, even though we may not have played any part in booking or managing the transportation,” he said. “The study provides data that supports the need for the Federal Maritime Commission to advance its proposed rule to end this unreasonable aviation practice.”
Fifty-one percent of logistics managers surveyed said they didn’t believe there would be a national supply chain database, while 22% said they did and 27% said they weren’t sure.
Logistics managers and government officials alike have said that sharing data would speed up freight movement, help reduce costs and create savings that could be passed on to consumers.
“Hard data is the backbone of effective supply chain management, especially amidst the uncertainty highlighted in this research,” said Karen Kenney, president of CONECT. “Intelligence about real-time freight flows is essential. The research highlights the need for industry to rally behind better data sharing solutions.”
Nate Herman, Senior Vice President of AAFA, told TBEN that the problems that caused the supply chain crisis are far from over.
“Now is the time to bring all stakeholders together to create and implement real solutions to structural problems so that we don’t bounce from crisis to crisis,” he said.
Among the biggest challenges cited by logistics managers in the survey were the lack of availability of raw materials, port congestion, a lack of skilled workers and dwindling warehouse space due to rising inventories. Terminal rules for collection and drop-off of containers and canceled sailings were also mentioned.
Inflated inventories have kept warehouses overcrowded and respondents said they saw warehouse prices increase by 400% as space shrinks. That benefits the consumer, who picks up heavily discounted items while retailers try to pull products from the warehouses.
Scott Sureddin, CEO of DHL Supply Chain, said freight volumes were flat after Cyber Week, but are now 10% higher than a year ago as retailers lower prices to free up inventories.
“Customers are store discounts and we see that in the items we move. It’s the higher value products, like tennis shoes over a cheaper T-shirt,” he said. For years, retailers can’t sit on this inventory, so the discounts they’ve been pushing will have to continue.”
Energy prices and labor are two inflationary pressures that respondents say continue to drive up logistics costs. Russia’s war against Ukraine followed by tariffs imposed during the Trump administration were the top geopolitical events impacting the supply chain, followed by Covid.
In terms of employment, respondents said they were concerned about the mental health of their workforce and about the shortage of skilled workers, adding to stress. The survey results identified these issues as: employee burnout (65%), shortage of employees with the right skills (61%), and hiring to address the skills gap (75%).
“International logistics is still a people-driven business,” says Kenney of CONECT. “The research reveals a variety of supply chain challenges, but none of these will be solved without the right talent and expertise.”