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Supply chain disruptions increased 88% year over year in 2021, says data released by risk management platform Resilinc, with disruptions related to supply shortages increasing 452%, the largest increase across all event types. Although human health disruptions fell 68% year over year, 2021 saw the most factory fires ever recorded in a single year. The uptick is mainly due to gaps in regulatory and process execution as well as a shortage of skilled labor in warehouses, the report says. The platform sent 491 alerts for supply shortages, including semiconductor chips, plastics, paper, and raw materials. Supply shortages are driving consolidations, mergers, and business sales as companies look for a quick cash boost or optimize the supply chain to best serve their customer base, the report says. Labor disruption events increased 156%, extreme weather events increased 130%, and cyberattack events increased 143% year over year. North America experienced the most supply chain disruptions (5,417), followed by Europe (2,838) and Asia (2,128). The most impacted industries were life sciences, healthcare, automotive, high tech, and general manufacturing, says Resilinc. Top Supply Chain Disruptions in 2021
The Year of Capacity All signs indicate that 2022 will be the year of capacity—not just for air, ocean, ground, and final-mile parcel, but also in terms of labor and the customer experience, SEKO executives stressed in a media call discussing Chinese New Year’s impact on the supply chain. Delays are simply routine now, and have steadily increased on routes from China to the U.S. West Coast since October 2021, the logistics company says. Meanwhile, consumers continue to purchase at a healthy clip. Many of the delays in China are the result of its zero-tolerance COVID policy imposed by port authorities at key ports. “A lot of the impact has been on the land side, with aggressive testing regimens and requirements for truckers,” says Akhil Nair, vice president of global carrier management for SEKO. “In some cases, this reduces the available trucking capacity up to 50%.” In the United States, the most critical determinant of growth will be whether consumer demand tapers in the face of supply-side inflation, or if the supply side recovers before that happens. “It’s unlikely the latter will happen at least for the first six to nine months of the year,” says James Gagne, president and chief executive officer at SEKO. “The current combination of high demand, constrained supply, and accelerating prices is simply not a sustainable configuration.” The ongoing labor shortage across sectors will remain a key factor impacting recovery. The pandemic was a catalyst for truck drivers’ early retirement, especially on the long haul, Gagne says. As for nearshoring, many companies will not completely part with China in the short term. Even as Mexico ramps up, for example, there’s still a need for components to support that manufacturing, he adds. Marketplaces such as Amazon continue to bring distribution activity in house by building their own fleets, and the rise in digital transformation to streamline operations and improve the customer experience has never been more apparent. The proliferation of global cross-border parcel creates a massive need for a more tech-enabled consumer experience and predictive data, which fills the gap between the airport gateway and the consumer’s doorstep. “We’re coming into the future of automation,” Gagne says. Meanwhile, some undercurrents are quietly creating churn. Winter storms are increasing trucking prices, e-commerce demand has created a shift from over-the-road to local transport, and there’s less receiving capacity at distribution centers. “If you visualize an iceberg, there are many things below the waterline that aren’t top of mind that affect price and capacity,” says Rick Lee, chief operations officer.
TOP 6 DISRUPTION EVENTS OF 2021 1. Factory fires 2. Mergers and acquisitions 3. Business sales 4. Factory disruptions 5. Leadership transitions 6. Supply shortages
Source: Resilinc
February 2022 • Inbound Logistics 19
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