The congestion and associated bottlenecks now challenging the intermodal supply chain are the biggest problems facing US transportation as we transition into 2022. Unprecedented and unpredictable cargo volumes have driven a new response to inventory management — “just in case,” rather than “just in time” — that is at the heart of the matter.
Can shippers recalibrate supply chains even as consumer demand for import goods remains strong?
Just-in-time supply chains have driven the development of the modern intermodal system, including ports, terminals, motor carriers, and rail lines; for decades the model has been a key driver of globalization.
Enter the just-in-case model. The pandemic economy of the past 18 months created non-traditional consumer behavior and skyrocketing demand for products in lieu of services. This preference for goods of all types, supported by increased spending from stimulus checks, followed the downturn of early 2020, and the subsequent out-portioned demand led to inventory stockpiling.
Now, the downsides of just-in-case planning are all too visible. Congestion is the obvious one, along with capacity constraints and labor shortages. With no room left to move and store freight, goods “dwell” longer at sea, at the ports, in intermodal facilities, or wherever there is space. Compounding the supply side of the transportation picture is the relatively new expectation of next-day delivery.
Given that the growth of e-commerce will outlive the COVID-19 pandemic, what shippers need now is a “just-enough” model, a balanced solution that delivers the nimbleness of just-in-time operations and the insurance of just-in-case planning. To facilitate this change, it is imperative that supply chain participants provide more transparency and consistent information sharing across modes and with cargo owners and shippers.
With timely and accurate data, available to all when needed, intermodal can regain its footing. In its absence, cargo transportation capacity and resource allocation will continue to suffer, leaving the industry incapable of accommodating the next “black swan” event.