Supply Chain Pain Now Seen Stretching to mid-2023

Supply chain pain could extend well into next year, industry experts said recently, further straining the U.S. food industry and other businesses.

That’s according to Camerican International President Josh Gellert, who told The Food Institute this week that, while disruption was easing for those relying on ocean carriers, congestion at domestic warehouses and the specter of a West Coast port strike continued to challenge supply chain operators.

He also noted high interest rates, economic uncertainty, and the war in Ukraine continued to pressure supply chains, as well.

Boeing CEO David Calhoun also shared his belief that supply chain pain could persist through 2023 while speaking at Bloomberg‘s Qatar Economic Forum, reported Reuters (June 22).

“It’s been a real issue for manufacturers and will probably stay that way in my view almost to the end of next year,” Calhoun said.

Global Pressures Cause Further Disruption

Michael Murphy, who serves as senior director of the global supply chain at Camerican, said the U.S.-Asia supply chain would likely remain disrupted until second quarter 2023, but said better efficiency and modernization of U.S. port infrastructure would be needed to truly normalize.

Following China’s recent decision to lift COVID-19-related lockdowns, many importers feared a dramatic spike in imports to the U.S. from the country. Thus far, those fears had not been realized.

“Vessels are not full as yet, and there’s a growing expectation that the months of August and September may see a sudden spike in volume,” he said in an e-mail to The Food Institute.

It wasn’t just the U.S. that was seeing supply chain disruptions, either.

“European port congestion and vessel delays are constant, and rates remain high from Europe until 2023,” Murphy said. “South America rates remain high due to full vessels and port congestion, mainly in destination ports on the U.S. West Coast.”

Logistics Costs on the Rise

Total logistics costs in 2021 reached $1.85 trillion, rising 22.4% from a year prior and representing 8% of the U.S. gross domestic product, according to the State of Logistics Report from the Council of Supply Management Professionals (CSCMP).

Of note, inventory-carrying costs increased 25.9% in 2021, with transportation costs jumping 21.7%. This dynamic led to uneven supply chains and inconsistent product availability for consumers shopping both in-person and online.

CSCMP noted trucking freight continued to see more volume and opportunities, with road freight expanding by 23.54% to an $831 billion spend in 2021. Many operators could turn to trucking considering a growing backlog on the U.S. rail industry.

Port Bottlenecks Extending into Freight

Railroad operators are beginning to report that backlogs at the ports of Los Angeles and Long Beach have begun to overflow into the nations railways, too, with some retailers waiting weeks to move cargo by trains out of the regional seaports, reported The Wall Street Journal (June 24).

The backlog is stretching as far as BNSF Railway Co., which said it’ll limit the number of boxes the railroad will carry out of Southern California.

The Port of Los Angeles’ executive director, Gene Seroka, said about 29,000 boxes were awaiting pickup via rail during June, tripling the usual number of cargo being held in container yards just as peak import season hits.