It has been compared to the game of “Whack-A-Mole” how the world is constantly congested, both within and between nations, from China to the U.S. to the U.K. and Europe and beyond, with cargo ships moored offshore waiting to berth, empty containers piled up at ports, undriven trucks parked at depots, and warehouses filled to the brim

Few individuals gave global supply systems any attention before the Covid epidemic hit. In fact, the majority of the world’s population, with the exception of those of us who either have worked for the collection of companies that make up the logistics sector—think packaging, shipping, port management, and dockworkers; air cargo, railways, freight forwarding, and trucking; and warehousing, inventory control, and informatics—or who were in charge of negotiating the international rules and policies that govern how businesses in the sector operate (I admit this), plies guilty. The shocking news stories and images of the American West Coast in October 2021 were what drew the public’s attention. Unable to discharge their Asian cargo at the Ports of Los Angeles and Long Beach, a record number of cargo ships—more than 100—were stranded in the Pacific Ocean. On the docks of the ports, more than 100,000 empty containers headed for outbound Asian routes are obstructing traffic. Incoming West Coast truckers were unable to discharge their empties at the ports, freeing up room for them to on-load incoming containers full of goods to be transferred to warehouses and wholesalers onto their rigs. 

 

Logistics

For the previous 20 to 25 years, chemical supply chains have seen a very benign climate, with the exception of the Financial Crisis in 2008/9

Consider the cost of shipping cargo—by truck, train, air, or sea. Increases or decreases in these rates work to rebalance markets that have obvious distortions and dislocations. They frequently receive media attention. Such is the case that ships arriving from Asia may likely attempt to sail to other ports where prices are cheaper, such as Oakland, when cargo rates at certain seaports, say those in Southern California, rise dramatically as a consequence of congestion (or other circumstances). The LA Basin may experience less congestion as a result of these rate differentials, but most commentators overlook the fact that Oakland’s port facilities, particularly its on-land infrastructure, are still uncertain about their ability to offer the same level of service, competitive pricing, and transfer speed. The turmoil of today’s supply chains serves as a clear warning from the Whack-A-Mole game: the logistics sector will have no option but to adopt pricing and delivery strategies that better balance “willingness to pay” on the demand side with “capacity to deliver” on the supply side.

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