2021 was another challenging year for global supply chains. Factors like the ongoing pandemic, extreme weather events, and congested ports caused significant local and international disruptions, forcing companies to adapt on the fly.
To make the most of these challenges, it’s important to learn from them. Here, we’ll discuss some of the most significant sources of supply chain disruption of 2021 and some core lessons that companies in the freight and logistics industry can take away from them.
Don’t want to relive the headaches of 2021? Jump ahead to our recommendations for finding calmer waters in 2022.
The ongoing pandemic
The most obvious and far-reaching source of disruption throughout 2021 was also number one the year before.
The COVID-19 pandemic has gone through several ebbs and flows in the past twelve months. While we all hoped vaccines would bring the pandemic to a swift end, new variants and new waves of infection continued to cause widespread issues.
Staffing shortages have driven up the price of labor across all sectors and made finding qualified people next to impossible in some industries. Spikes in cases have led to warehouse closures, dramatic shifts in supply and demand, and materials shortages.
In the best-case scenario, pandemic-related supply chain disruptions will wane in 2022 — but if 2021 taught us anything, it’s to prepare for every scenario.
Brexit has put a severe snag in the international supply chain, especially as it enters and exits the UK. Businesses that rely on trade between the UK and EU face a number of challenges that have sparked slowdowns, impacts on sales, and increased administrative costs.
Devastating storms, record-high temperatures, and other extreme weather events are becoming increasingly common, causing serious logistics issues like road and port closures, canceled cargo flights, interference with communications systems, and dangerous driving conditions.
In 2021, these issues resulted in longer delivery timelines, disappointed customers, and higher operational costs. Events that particularly impacted supply chains in 2021 include Hurricane Ida, the unusual onslaught of December tornados that hit the central and southern US, the deadly Texas freeze, and record rainfall in Malaysia.
As more buying and selling moved online due to the pandemic, more goods than usual were traveling through ports, across rail lines, and through warehouse depots. This contributed to container shortages and drayage backlogs that caused significant bottlenecks for US ports in 2021.
The White House stepped in to help address these issues with some temporary measures, particularly for the ports of LA and Long Beach, which handle 40% of the country’s containerized imports. While most bottlenecks have been somewhat relieved, only time will tell if staffing shortages related to new coronavirus variants could create new backups.
Three takeaways for 2022
What lessons can we distill from last year’s biggest challenges on how to overcome supply chain disruptions?
Lesson #1: Leverage partnerships and collaboration for maximum adaptability
Carriers should consider expanding and diversifying their national, regional, and local carrier partnerships to boost flexibility and access to capacity. Depending on the shape of your supply chain, that may involve more intermodal capacity to balance middle-mile transport or new software enablement to help pilot your operations through staffing shortages.
Additionally, many transportation and logistics companies are turning to BPO partners to handle the costly and challenging processes involved in customs documentation. Paperwork mistakes regularly lead to delays and unexpected expenses for international shipping. This is especially true for companies that need expert help with Brexit-related increases in paperwork.
Lesson #2: Strategically automate processes
As guidelines and regulations change ad hoc to meet the challenges of a world in turmoil, you need all hands on deck to handle the job. Major bottlenecks originate where personnel isn’t available to undertake essential tasks. Fortunately, many rote operations can be automated to minimize the burden of administrative work on your team.
Automation also frees up time for staff to focus on serving customers and responding to supply chain disruptions.
Lesson #3: Build a supply chain disruption mitigation strategy
“Expect the unexpected” is something of a business cliche, but for a good reason — planning for every scenario is a crucial leg up in uncertain times. But how do you anticipate shifts in a rapidly changing world?
A digitized supply chain allows you to collect and process vast amounts of data as part of your day-to-day operations. With this information, you can create data-driven plans for responding to inclement weather, port closures, and other disruptions before they become catastrophes. That way, when a new situation arises, you can use a combination of real-time data, scenario modeling, and experience to inform your decision-making, plan for externalities, and build a winning strategy.
Decisions need to be made quickly in the transportation and logistics industry, and agility is vital. Incorporating real-time information that you’ve gleaned from your digitized supply chain can lead to big payoffs like improving the customer experience, boosting sales, and reducing waste — all while mitigating supply chain disruptions.
We hope the supply chain world will be less challenging in 2022. But with new and emerging challenges to add to leftover concerns from last year, it’s important to be prepared for anything.
By establishing strong, strategic partnerships, automating repetitive administrative tasks, and leveraging technology to assess and mitigate risk, you can turn challenges into opportunities for growth — this year and beyond.
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