November Brings New Supply Chain Challenges

As we enter a new month, SCMR takes a look back to significant trends in October.

Fulfillment factor. Order volumes across global supply chains have suffered the biggest quarterly fall since the first lockdowns in early 2020 according to new data from Tradeshift, a B2B digital network consultancy. The Q3 Index data shows cumulative order volume growth fell by 24 points globally compared to the previous quarter. An index score of 85 in Q3 means order volumes are tracking 15 points below the level Tradeshift had forecast for the period before the pandemic. Their data suggests that suppliers are struggling to fulfil a huge backlog of orders following a prolonged spike in demand as economies have reopened. Global invoice volumes, which indicate how quickly suppliers are able to fulfil orders, climbed by a slower than expected 5 points and remain 31 points below the pre-pandemic forecast range. “The delta we see between ordering activity and invoicing is indicative of massive fulfilment issues across global supply chains,” said Christian Lanng, CEO of Tradeshift.

Ouch. The race to deliver a Covid-19 vaccine has been likened to a moonshot, but in several ways landing a man on the moon was easier. In his new book “A SHOT IN THE ARM: How Science, Engineering, and Supply Chains Converged to Vaccinate the World,” MIT Professor Yossi Sheffi recounts the vaccine’s extraordinary journey from scientific breakthroughs to coronavirus antidote and mass vaccination. And he explores how the mission could transform the fight against deadly diseases and other global-scale challenges. “The historic Apollo moonshots built a dozen rockets to carry astronauts to a single location. In contrast, vaccine mission teams mass-produced billions of doses of a complex medication from a standing start, and delivered them to billions across the globe,” says Sheffi. This is a story of bold innovation and risk-taking he notes, “and interdisciplinary teamwork that involved experts vital to the mission’s success such as manufacturing engineers and logistics managers.”

Dark forecast. Imported consumer goods should arrive in the country at least six weeks earlier than normal to make it onto shelves in time for Black Friday, according to HIS Markit. Due to the continuing delays at U.S. ports consumer goods from Asia will need to have cleared our ocean cargo gateways by now, compared to a usual early November cut-off date, or risk not making it into shopping baskets this Christmas. The warning comes as 1.59 million twenty-foot equivalent units (TEUs) imports into the U.S. arrived in September from Asia, up 13.8 percent from pre-COVID September 2019, say researchers. The elevated imports levels from Asia send a clear message that the port-related congestion problems are like to continue into 2022. High import volumes contributed to the port congestion, including taking longer to move containers off the pier and being unloaded at distribution centers, removing significant capacity from the system over the last few months.

Consumers measured. January Digital and Coresight Research released their “2021 U.S. Holiday Insights Survey” last month, showing that U.S. consumers expect that 59% of their holiday spending will be online – up from 52% in 2020 – according to the survey. Researchers also found that 56% of U.S. shoppers will discover new products by browsing online. Seventy-one percent of consumers over 60 will spend more on online orders for home delivery, accounting for much of the rise in eCommerce this holiday. Furthermore, across all age groups, the top category for planned holiday spending is health, with 56% of consumers planning to purchase more health products compared to 2020, including vitamins, supplements and therapeutic devices. Researchers add that 30% of respondents prefer shopping through a retailer, while only 19% buy directly through the manufacturer or brand. Finally, U.S. consumers this holiday season desire fast, free delivery for online orders more than they desire promotions or deep discounts.

No gridlock here. Port of Oakland officials called on shipping lines to route more cargo through their gateway, as their marine terminals are “congestion-free.” Oakland said containerized cargo volume is up 4.2 percent in 2021 but that there’s capacity for more. That’s in stark contrast to Southern California ports where up to 70 ships daily wait at anchor for berth space. The port said it hasn’t experienced vessel backlogs since August. Oakland’s call for cargo comes as the U.S. struggles to remedy supply chain gridlock. Ports on the west, gulf and east coasts have reported crippling delays in moving cargo. The congestion is blamed for everything from merchandise shortages to rising inflation. Several ocean carriers omitted Oakland in recent months, the port said. It explained that excessive Southern California delays necessitated immediate return of some ships to Asia without stopping in Oakland.

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