There’s been a lot thrown at supply chains lately. The up and down Covid-19 surges, material shortages, increased consumer demand, and more. And we can’t forget to mention other factors like the new covid variants, port congestion, and dock delays.  

Many of you might be wondering what Trinity is doing to stay agile during these supply chain bottlenecks. Let’s first quickly dive into what the supply chain is currently facing, and then we’ll go into how Trinity keeps moving forward.  

Current Supply Chain Bottlenecks 

Labor Shortages 

I’m sure you’ve heard and seen all the effects of the labor shortages today. Whether the companies are big or small, or in fast-food or logistics, every single industry is facing this issue. 

Over the past 22 months, businesses have been hit hard with workers’ pandemic-related absences. According to an analysis from the Integrated Benefits Institute, these absences have cost employers more than $78.4 billion. That’s nearly $1 billion every week. 

Along with this, the new omicron variant is leading to more staff shortages as people take sick leave and suppliers navigate new restrictions. This includes factoring in China’s zero-COVID strategy, which is likely to continue to disrupt both production and transportation of goods, possibly for the entire year.  

However, backorders in many sectors have been filled, but consumer demand may well be cooling now that furloughs have ended, and interest rates are beginning to rise. So, some companies might end up with an oversupply of goods after everything is said and done.  

While some people thought that these issues would stay in 2021, the start of 2022 is showing no signs of slowing down these disruptions.  

The beginning of this year has been filled with high levels of return volume from the holiday season, along with the suspension of air on-call pickups for packages. All these issues are mixed effects from weather, omicron, labor shortages, and more.  

Struggling to Keep Shelves Full 

A direct effect of the worldwide labor shortages is businesses struggling to keep shelves stocked. While Covid-19  rampages across the country, it’s not just healthcare and hospitality businesses feeling the effects. Grocery stores are getting gut-punched by the virus as well. 

Product shortages have been widespread throughout these 22 months of the pandemic. These shortages have varied in many different products, from toilet paper and hand sanitizer to different types of meat to even bread and soda. As a result, empty shelves have returned at supermarkets as grocery employees call out sick and truckloads of food arrive late.  

While all companies feel the effects of empty shelves, shipping companies, like FedEx are especially struggling with on-time delivery of packages and products due to the massive truck driver shortage nationwide. Unfortunately, the only solution currently for these issues is time.  

Ongoing efforts are continually in use to increase the recruitment and retention of truck drivers to combat these supply chain issues and stop bottlenecks from occurring.  

Struggling Imports 

Port congestion and backup is another huge issue facing the logistics industry and the entire world right now. Ports worldwide are seeing high wait times and a lower percentage of on-time delivery. In addition, many containers and ships are forced to dock and wait until they can be unloaded due to labor shortages.  

Although many different countries are facing this congestion and delay, no other is struggling more than China. Covid-19 flare-ups in China are straining supply chains as authorities tighten movement restrictions in various cities to stamp out the virus. 

Ningbo, a port city of around 8 million, is dealing with a partial lockdown. Its Beilun district has been especially hard hit, and that’s spelled major problems for the shipping industry. According to The Loadstar, “Many truckers live in Beilun, and there are complicated Covid-19 control policies there, so it’s extremely difficult to bring containers in or out.”  

With the Chinese New Year approaching, some cargo has been rerouted to the Port of Shanghai, which is already congested, The Loadstar reported. In addition, many smaller shipping services providers have already suspended operations this year ahead of the holiday, which starts on February 1^st.  

No Signs of Slowing Consumer Demand 

As of right now, however, demand is stronger than ever and shows no indications of an immediate post-holiday crash. As a result, changes on the demand front are likely to be slow and steady, leading to gradual market shifts over the next several months.  

Combined data from the OTVI and the OTRI indicates that accepted volumes were up three percent year-over-year in early December. Additionally, tender rejections are currently down about 25 percent year-over-year. Rejection rates are at their lowest levels since July 2020.  

Decreasing tender rejections indicates that freight is being moved at contract rates, which is a hopeful sign for shippers. Still, with a rejection rate of over 19 percent, strong demand and constrained capacity continue to stress the market.  

Unfortunately for shippers, spot and contract rates have continued to climb as demand surges, shortages drag on, and peak retail season continues. In early December, dry van spot rates rose to $3 per mile for the first time ever. Likewise, dry van contract rates reached an all-time high – $2.96 per mile – simultaneously, according to Arrive’s December market update. 

Shippers that can create more flexibility in their transportation strategies will fare best as conditions gradually improve in the upcoming year. Moving away from annual RFP’s in favor of shorter contracts, one-way shippers can take full advantage of any upcoming rate drops. While these shippers are also exposing themselves to slightly more risk in the event of unexpected rate hikes, taking a chance might pay off in 2022. 

How Trinity is Here to Help 

Keep You Updated 

At Trinity, we make sure we keep you up to date on all the industry’s information and news. We provide: 

• our monthly freight market updates 
• weekly news updates 
• monthly customer newsletters with industry-specific updates,  
• communications from your representative.  

Giving You The Trinity Experience 

Along with giving up-to-date news and information regarding every industry, we are also here to provide you with exceptional service and communication, especially when facing these bottlenecks. 

Hear from some of our Team Member Experts on how Trinity is staying agile during these times: 

• “Labor Shortage at the shipper or receiver due to COVID outbreak and/or protocols – day of pickup or delivery. Not a whole lot we can ‘solve’ but providing everyone involved with a friendly, calm, timely, communication goes a long way. We often talk about drivers but one area of our industry that seems to get less press are those shippers/receiver teams. The good ones are gold baby!” – Benjamin Bowne, Sales Executive 

• “I would echo Mr. Bowne’s assessment. Handling the conversations with carriers, customers, and warehouse alike with care and empathy goes a long way. Everyone has been impacted over the last year by the pandemic, it’s the experience that our overall Team provides throughout the transaction that has proven invaluable. This is echoed in the feedback we have received from all the parties throughout the pandemic. We care about what we do.” – Chad Eckland, Director of Sales 

• “We are being more agile by focusing on internal as well as external adjustments. A large percentage of our staff are working remote to avoid being short manpower due to illness. Those that are in person are participating in higher safety standards within each location. We are asking customers what are their Covid standards, when applicable, and how they are adjusting so we can conform to their needs. We are checking on trends for spiking locations across the U.S. to see how it will affect imports/exports and its affects of capacity in that area. This is a little harder to do but definitely on the radar. If a shipper/receiver is affected, then we prompt carriers to know what expected delays may occur while costing that into what we are offering carrier.” – Tony Austin, Director of Sales 

• “In addition to all the good points already mentioned, I would add that even though I always try to consider any and all viable solutions for my customers, I do a little extra now, because of the circumstances, to help educate customers on conditions, market changes, expectations, and challenges. In addition, I emphasize that I do look under EVERY rock to help them get their freight moved by leveraging all of the modes and resources we have available, as well as be thorough in understanding the factors to be considered in moving their freight (flexibility in dates, rates, modes?). I feel like we have more detailed and personalized conversations, and I provide an added level of insight to show customers that I am truly being a partner to help them through this difficult time.” – Kimberly Meadows, Sales Executive 

We Are Experts 

While this may be our first pandemic, after 40 years of being in this industry, it certainly isn’t our first season of supply chain disruption, high freight volumes and rates, or tight capacity.  

We are well versed and experienced in many different situations, and we know when and how to pivot quickly and keep business moving forward. We follow through on our efforts. When issues arise, we work until they are resolved and keep open communication every step of the way.  

We Help You Plan 

You can always use your Trinity relationship to discuss current and upcoming projects. This helps us give you things to look out for to keep your transportation aspect of business more stable and reliable.  

Having a solid relationship with an expert like Trinity will prove to be your largest asset no matter what supply chain bottlenecks you may face.

If your ready to get support in your logistics with Trinity Logistics, no matter what issue the supply chain has, lets get connected.

By: Christine Morris 

What do semiconductors, plastics, furniture, chlorine, and more all have in common lately? They are near impossible to find. As disruption after disruption has interrupted supply chains, shortages are now messing with shipping and demand. Specifically, raw material and product shortages are affecting the chemical industry. With many other industries relying on the chemical industry, this is becoming a significant challenge to overcome.

MATERIAL AND PRODUCT SHORTAGES

Shortages in the chemical industry have worsened over the last quarter. According to a June survey of 84 National Association of Chemical Distributors, nearly 85 percent of distributors report at least one imported item as out-of-stock. This is a huge jump compared to only 47 percent found in March. Inventories in the chemical industry have begun increasing, but they have yet to reach their pre-pandemic levels. These shortages are not only hurting the chemical industries but the many industries that rely on them. One example is the shortage of citric acid, as it’s often used in vitamin or electrolyte drinks, even in soda. These material shortages mean tight supplies, high prices, and continued delivery delays.

Some recent materials and products that currently face shortages in relation to the chemical sector:

Semiconductors

Many manufacturers worldwide are having trouble securing supplies of semiconductors, delaying the production and delivery of goods, and increasing prices. Several factors are driving the crunch, which first affected the auto industry. The shortage is going from bad to worse, spreading from cars to consumer electronics. With the bulk of chip production concentrated in a handful of suppliers, analysts warn that the crunch is likely to last through the rest of 2021. Materials most vulnerable in semiconductor production include wet chemicals, solvents, photoresists, gases, and substrates. Several semiconductor process materials in the petroleum supply chain are also running short. Those materials include acetone, PGMEA, NMP, and IPA, and a few of several solvents.

Plastics

Yet another shortage complicating business is plastics. Food packaging, automotive components, clothing, medical and lab equipment, and countless other items rely on them. Since March 2020, a perfect storm of events has been putting severe strains on the supply of plastic raw materials, base plastics, and compounded plastics. This shortage has hit plastic product manufacturers very hard. 

The demand for plastics continues to surge, especially for food packaging and automobile components plastics production. Plastics required by high purity chemical providers for packaging and wet processing equipment are experiencing raw material price increases due to availability issues.

Plastics make every kind of product imaginable — from food packaging, appliances, smartphones, and car parts to exercise equipment and roller skates. So with the ongoing surging demand for goods, it’s easy to see why these shortages are a big deal.

Chlorine

The swimming pool boom from the pandemic created a higher chlorine demand, thus contributing to a shortage. There was also a manufacturing lab fire in August of 2020 in Louisiana that only further aided the shortage. 

Some pool supply stores have imposed quantity restrictions. In certain regions, prices for chlorine tablets have doubled from last year. The chlorine shortage is widespread, and it will likely worsen as homeowners use their swimming pools for the season. 

Gas, Oil, Fuel

It’s not quite that there’s a huge shortage of crude oil or gasoline. Instead, it’s a shortage of tanker truck drivers who deliver it. According to the National Tank Truck Carriers, 20 to 25 percent of tank trucks in the fleet are parked due to the shortage of qualified drivers. The driver shortage has been an issue for a while, but the pandemic multiplied it. 

Gas prices, which typically rise at the start of the summer as seasonal regulations take effect — requiring the more expensive “summer blend” of gasoline needed to combat smog — are also rising. The national average has surpassed $3 a gallon this summer and could get even higher if any hurricanes hit the Gulf Coast or if there are any other disruptions to supply, such as a refinery fire. 

Other Raw Materials

As countries work to switch over to green energy, the demand for copper, lithium, nickel, cobalt, and other rare earth elements is soaring. And these raw materials are vulnerable to price volatility and shortages as limited access to known mineral deposits is another risk factor. Only three countries together control more than 75 percent of the global output of lithium, cobalt, and rare earth elements – the Democratic Republic of Congo, China, and Australia. Constraints on the supplies of their raw materials — especially polyethylene (PE), polypropylene (PP), and monoethylene (MEG) — are leading to factory shutdowns, sharp price increases, and production delays.

SHORTER SUPPLY + HIGHER DEMAND = HIGHER COSTS

Consumer spending rapidly grew because of the pandemic. Remote working and schooling created an increased demand for electronics. Higher demand came for food packaging and healthcare markets. Automotive production rebounded and surged beginning in the third quarter of 2020. All these and more are impacting the chemical industry.

These disruptions have undoubtedly led to rising prices. Echemi reported in late March that more than 20 chemical companies including BASF, DuPont, Dow, DSM, and LANXESS, have raised prices. These price hikes are largely due to difficulty in getting raw materials used to make products. And there’s less supply than there was a couple of months ago. As demand is rising relative to production, prices have increased for chemicals, like polypropylene, acetone, and other solvents. 

…AND LOGISTICS DELAYS

Not only have shortages worsened since March, so have delays. NACD’s survey found that 82 percent of respondents are dealing with an average uptick in travel time for their shipment of 11 days or more. And these issues extend throughout the supply chain. 

Containers and boats to ship products from overseas are in short supply. Products could be sitting in a factory overseas for months because they can’t get loaded onto a ship. Then you have the ports struggling with delays. Currently, you can look at live video outside of Los Angeles and you’ll see up to 30 boats driving around waiting to get an appointment because there are so many ships coming in. Ships are waiting longer to get in and once they do get in, there is a shortage of drayage drivers that only adds to the congestion. 

A lack of truck drivers and warehouse workers has contributed to the delays as well. The driver shortage was an issue before COVID, but the recent labor shortage in warehouse workers has created a larger problem. Say you do have a truck available. But if you don’t have somebody in the warehouse to pull the goods out of the racks and load them on the truck, then that’s another issue causing delays.

Supply chain issues continue to hamper the whole of manufacturing. It’s hard to look at the global supply chain and not think, “everything that can go wrong has.” The impact of these issues continues to impact many industries downstream. On raw materials such as chemicals and plastics, inventories are unlikely to be rebuilt amid continuing strong demand. There’s simply not going to be a quick return of inventories. 

WHAT YOU CAN DO DURING THESE TOUGH TIMES

Begin building a more resilient supply chain

Consider moving manufacturing operations closer to home. This can help reduce your transportation times from future delays or disruptions. Make plans now to be prepared for all potential disruptions. Disruptions to the supply chain are not new, but this current phase of repeat instances has been rougher than most.

Gain access to technology

Integrating technology into your supply chain has now become a necessity. Implementing technology like a transportation management system (TMS) will help all stakeholders maintain real-time communication and visibility. A TMS can help you optimize your routes and work with the best carriers, increasing your service levels and reducing any delays. It can provide you with data-driven insight so you can better manage current and future disruptions. And by using data analytics, you can recognize which carriers most likely have available capacity, reducing your time spent on transportation coverage. Gain insight into what’s happening across all markets, ensure proper rates for shipments, and keep more control over your budget and logistics costs with TMS technology.

Work with experts that keep a pulse on the market

An expert can help you pick up on early warning signs and help you prepare for potential constraints. They can also offer you alternative solutions when needed. 

Here at Trinity, we are a Team of experts. We do more than arranging your freight. When working with Trinity, we become logistics partners in your business and aim to help you with your growth. We can help you streamline your logistics procedures and give you insight into the freight market. We keep a close eye on it and keep you educated to help you plan and forecast. 

We also work very hard to follow through on what we say we are going to do. When issues arise, we work until they are resolved, keeping communication every step of the way. We have over 40 years of experience in logistics and industry challenges in supply chains is our day-to-day.

Industry experts and forecasters are saying this tough market is far from over. It may even look to extend into 2022. So don’t hesitate in asking for help. We’re here and ready to provide you with our People-Centric approach for you during this historical time in logistics.

Author: Jennifer Braun