The logistics community has faced many challenges in the past two-and-a-half years. While some are starting to resolve, others are escalating, and more are waiting just around the corner — which is great, because we all get into logistics because we love solving challenges!
Port congestion and backlogs have shifted between the East and West coasts during the pandemic, but now we are seeing Houston as the main port dealing with these issues. Backlogs and bottlenecks will continue as consumer demand is in flux and ongoing inflation affects buying power.
Thankfully, freight rates have decreased over most modes of transportation, with rail and barge being the exception. Lack of labor is a persistent problem throughout all modes and stages of the supply chain. With many union negotiations stalled or at an impasse, ongoing global labor movements have deeply influenced transportation as shippers shift cargo routes to avoid delays. A potential US rail strike would cost an estimated $2 billion per day and have deep ripples throughout the supply chain.
Skyrocketing energy prices are affecting everything from factory output to trucking and ocean freight. Refining capacity has been significantly reduced since 2019 due to political unrest, COVID-19, and extreme weather events knocking out capacity.
We are also seeing an increase in weather events impacting how we ship things. Cargo that would typically be barged may need to seek alternate modes due to low water levels, etc. Diligent planning and the ability to adapt strategy play a large role in successful transportation solutions — in August 2020, UTC delivered an 815Mt piece of energy equipment to the Port of Beaumont in the middle of Hurricane Laura. Knowing it was hurricane season, we performed a thorough risk assessment and had contingency plans to ensure the cargo arrived safely and on time.
Other issues coming down the road that we should keep our eye on are growing cybersecurity threats to the supply chain, increasing geopolitical unrest, and the reduced availability of raw materials.