The term “supply chain” is now ubiquitous, not only in the news but also in store aisles when a product shelf is depleted or empty. The general impression might be that we’re experiencing a global slowdown of manufacturing and production, but numbers say otherwise: The global Purchasing Managers’ Index, which tracks the prevailing direction of economic trends in the manufacturing and service sectors, reached an all-time high of 58.5 points in May, and has seen 15 consecutive months of expansion.
Arguably, the biggest problem we face now is getting the goods to retail.
The Biden administration has taken note of consumer demand outpacing product supply and turned its governmental gaze to U.S. shipping ports, the busiest of which are stacked high with shipping containers. As of June, the administration created a Supply Chain Disruptions Task Force to better understand the supply-chain turmoil.
In early October, to alleviate the shipping crunch at the ports of Los Angeles and Long Beach, Calif., President Biden directed the ports to operate around the clock. Port of Los Angeles executive director Gene Seroka says the move would help clear the docks, but it requires coordination with private-sector companies, longshoremen, dock workers, truck drivers, railroads and others.
The Los Angeles and Long Beach harbor commissions announced that in November, shipping companies would be fined if they surpassed a “container excess dwell fee” that sets time limits on how long containers can stay at marine terminals. The executive director of the Port of Long Beach, Mario Cordero, stated, “We’re going through a significant crisis.” Los Angeles harbor commission president Jaime Lee was quoted as saying that the penalties are not intended to raise revenue but to clear space for incoming shipments. The ports of Los Angeles and Long Beach receive about 40 percent of all port shipments into the United States and the most from Asia. Seroka says imports to the Port of Los Angeles were 70 percent higher than pre-pandemic levels. Forecasts show that the port is experiencing a 17 percent increase for 2021, which according to Seroka is the largest-ever increase in the Western Hemisphere. Until these goods are unloaded and moved out, outbound exports will wait, hence the global shipping bottlenecks at Los Angeles and Long Beach.
John D. Porcari, the U.S. port envoy serving on the Supply Chain Disruptions Task Force, says the move to 24/7 port operations is an “emergency system” that will provide fluidity and velocity to the movement of goods. However, he cautioned, “This is not flipping a light switch.”
Seroka pointed to the shipping optimizer that the Port of Los Angeles has instituted to collect real-time and secure data while providing operational efficiencies and analytics on shipments. The goal is to reduce dwell times (the amount of time cargo remains on a boat, on the dock or in a warehouse) and increase shipping-container movement. He says his team is creating an “orchestra of participants” to get on the same calendar and keep shipments moving — in other words, synchronizing container flow.
Shipping to U.S. ports is also hindered by transportation challenges, as existing systems and processes aren’t working so well in the new normal caused by the pandemic. A lack of truckers is one of the biggest challenges, leaving goods piled up at ports. Prior to the pandemic, according to news reports, truck-bound cargo generally was loaded and left a port terminal in about four days. That has stretched to weeks or more.
Another contributor is the change in consumer buying: more people seeking to buy goods, rather than relying on services, and the types of goods sought, such as the unprecedented demand for boats and marine products.
A summation of supply-chain issues at the start of this year’s fiscal fourth quarter comes from National Marine Manufacturers Association president Frank Hugelmeyer. “Like most industries, marine manufacturers are continuing to experience supply chain disruptions, which has made keeping up with historic demand challenging at times,” he says. “Fortunately, the industry is reporting improvements to some of these hurdles, and manufacturers are well-positioned to bring more consumers into the boating lifestyle in 2022.
“Additionally, we welcome President Biden’s recent actions to reduce bottlenecks at our ports and shipping networks,” he adds. “Ballooning delivery timetables has been a major source of our industry’s supply chain constraints, and we will continue working with the administration and Congress to resolve this issue.”
Chad Tokowicz, government relations manager for the Marine Retailers Association of the Americas, urges a constant sharing of information. “In order to remedy this issue, it is imperative that there is communication between retailers, manufacturers and decision-makers, so the full extent of this crisis can be understood and we can move forward with solutions to benefit everyone,” he says.
Callie Hoyt, NMMA’s director of federal government relations, is helping to keep the marine-industry supply chain at the forefront of leaders’ minds.
“Since there’s not a clear overarching solution to the problem, the best way for NMMA to assist the industry is to continue keeping our concerns top of mind for policymakers working to address the broader supply-chain issue,” Hoyt says. “The most common problem we hear from our members is delayed shipping and delivery times, and we pass this information along to policy-makers regularly.”
Hoyt is also involved with legislation that could provide some help. The bipartisan Ocean Shipping Reform Act of 2021 in part addresses port-disruption issues and would be the first major update of federal regulations for the global ocean shipping industry since 1998.
With the increased demand for marine products, the NMMA conducted a membership survey that showed 88 percent of companies have been affected by supply-chain problems, with the majority of CEOs expecting the situation to improve during the next six months. However, David Foulkes, CEO of Brunswick Corp., said recently that despite the accelerated raw demand for marine products, field inventories of boats may not stabilize for another three years.
Similarly, the MRAA is tuned in to the issue. “[We] understand how the current complications with the supply chain are negatively impacting our members, their businesses, and ultimately their relationships with customers,” Tokowicz says.
The disruptions will eventually ease, but the looming and unresolved question is when. Addressing issues where they are occurring — at shipping ports — should help.
This article was originally published in the December 2021 issue.