Field Notes: Logistics Edition
The global supply disruptions triggered by a variety of factors in 2021 will continue through this year, according to industry experts at IHS Markit.
In its latest report, researchers at the firm said the “highly synchronized global supply chain system developed over the past 30 years is under strain like never before and resolving the disruption will be less of a ‘sprint’ and more of a ‘marathon’ that runs well into 2022.”
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Daniel Yergin, vice chairman of IHS Markit and editor of the report, said what is unfolding in supply chains globally “is not only disruptive, it is also historic. Moreover, the intense new focus on inflation adds to the urgency to understand what is ahead for supply chains in 2022.”
The authors of the report say that while the global pandemic has been a significant factor in “driving the disruptions — with the current Omicron variant creating new uncertainties — it is not the only factor.” Other factors included labor challenges and “substantial capacity” issues. In retail, for example, the onset of the pandemic triggered unprecedented growth of online sales, which strained the fulfillment and last mile segments of the supply chain. And that pressure has not let up.
Peter Tirschwell, vice president of maritime and trade at IHS Markit and co-editor of the report, said each industry is “grappling with its own set of challenges and circumstances that, combined, make up the ‘Great Supply Chain Disruption.’ Only by taking an integrated perspective can one truly understand the problem, and why untangling it is going to take longer than anyone would like.”
For example, in the manufacturing sector, delivery times lengthened significantly in 2021, “and January 2022 began with many companies reporting severely constrained output, input costs rising faster than at any point in the decade prior to the pandemic, and Omicron causing fresh uncertainty,” authors of the report said, also noting that going into 2022, “companies reporting that output was constrained by shortages was running 3.5 times the long-run average.”
Regarding container shipping, Peter Tirschwell, vice president of maritime and trade at IHS Markit, said port congestion “continues to significantly slow the circulatory movement of ships, containers and other transport assets including chassis — removing capacity, lengthening transit times and forcing shipping rates much higher.”
In other news, XPO Logistics Inc. just announced a new milestone in the adoption of its XPO Connect digital brokerage marketplace. The company said, “carrier demand for the platform’s Drive XPO mobile app propelled cumulative downloads of the app to over 600,000 at year-end 2021, more than doubling the cumulative count in 12 months.
“Additionally, in the fourth quarter, the company had a 74 percent year-over-year increase in weekly average carrier users on XPO Connect, reflecting a substantial increase in digital truckload providers available to XPO customers,” the company said in a statement.
The news follows reports last week that XPO Logistics truck drivers in Southern California are seeking to unionize. The truckers want to join Teamsters Local 848, which serves the greater Los Angeles area and also join Teamsters Local 542 in San Diego. Around 250 truckers would be unionized.
With the XPO Connect app, the company said it has “prioritized the development of truck brokerage automation for over a decade, leading to our premier XPO Connect offering. Now that digital transactions have become a defining trend in our industry, our investments ahead of the curve are attracting significant freight volumes to our platform.”
XPO’s investments in its digital ecosystem include enhancements “that serve both customers and carriers. Recent introductions include an expanded API offering that allows shippers to access XPO Connect via Oracle’s Transportation Management cloud system; and end-to-end tracking automation for carriers with minimal driver interaction.”
Leveraging technology across the supply chain has been a priority amid the global disruptions, and industry analysts expect tech investments to continue this year.
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