Stay ahead of 2022’s supply chain crunch.
By Jake Newell, Procurement Manager, Colorbiotics
Demand is up, supply is down, and that’s how it’s going to be for the rest of 2021 and at least most of 2022. At Colorbiotics, our team is rolling with the punches and improving our internal processes whenever we run into yet another supply chain challenge. It’s a proactive approach that gives us an edge in the short term and in the long term, even after freight returns to normal.
What’s the current inbound freight situation?
Freight congestion starts at origin ports, where there isn’t enough capacity across all vessels to move product when it needs to be moved. That means it costs a lot more money to move what little product can be moved. Compared to early 2020, rates are up over 500%, and compared to early 2021, rates are up over 150%.
Everything with inbound freight is a domino effect, though, so schedule reliability and performance are also at all-time lows. Between January 2021 and July 2021, the 7-month average for schedule reliability was about 10% lower than the lowest month in the previous 4 years.
Has this port congestion happened before?
In 2017 and 2018, significant congestion disrupted inbound freight at ports along the west coast of the United States. (Long Beach, CA, is one of the highest volume ports in the world.) At that point, there were between 20 and 30 vessels waiting in the harbor. Right now, there are 50 at any given moment.
Steamship lines are already building new containerships to better meet demand, but a lot of those won’t be ready to run until 2023. It’s going to take time to let the current congestion work its way through the ports, but that isn’t stopping our team from doing whatever we can to work around the congestion.
Forecast to stay ahead supply chain challenges:
All of those complications add up to a supply chain crunch that won’t self-correct until at least 2023, so now’s the time to look towards 2022 and figure out how to navigate these challenges.
Next year, customer forecasting will continue to be a big concern. It’s no longer a just-in-time world, and right now, lead times in most industries have doubled or tripled. Providing additional lead time, whenever and wherever possible, will help ensure the product can be secured — and secured at a competitive price.