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According to a new survey by CNBC, more than half of logistics managers at large companies and trade groups say they don’t expect supply chains to return to normal until 2024 or later.
61% of respondents said their current supply chain was not functioning properly, compared with 32% who said it was working properly. When asked when they see the situation returning to normal, 22% are uncertain, 19% said in 2023 and 30% said in 2024.
Another 29% said during or after 2025 or never.
The dire outlook comes after nearly three years of global supply chain problems, beginning with the shutdown of Wuhan, China, where the Covid-19 outbreak began. Survey respondents said they are still placing orders six months in advance to ensure arrival.
The survey questioned 341 logistics managers for the week of December 12-19 at companies that are members of the National Retail Federation, the American Apparel and Footwear Association, and the American Footwear Association. The Council of Supply Chain Management Specialists, the Pacific Coast Council, the Agricultural Transportation Alliance, and the New England Commercial Companies Alliance participated in CNBC’s first supply chain survey..
Data sharing
When asked if they believe the Biden administration understands the challenges facing the supply chain, 59% of respondents said no.
Jon Gold, NRF’s vice president of supply chain and customs policy, said the administration has taken steps to address supply chain challenges.
For example, earlier this year, the administration launched a pilot program to share supply chain data called Freight Logistics Optimization Works, or FLOW. The Department of Transportation told CNBC there are currently 46 people on the show.
“The administration needs to maintain focus and continue to convene the right stakeholders in the supply chain to discuss ways to improve supply chain operations and expand data sharing to create a 21st supply chain of the century,” said Gold.
51% of logistics managers surveyed said they were not confident a national supply chain database would be created, while 22% said they did and 27% said they were unsure.
Both logistics managers and government officials say data sharing will speed up the freight process, help reduce costs, and generate savings that can be passed on to consumers.
“Hard data is the backbone of effective supply chain management, especially in light of the uncertainty presented in this survey,” said Karen Kenney, president of CONECT. “Real-time cargo flow intelligence is essential. The survey highlights the industry’s need to bring together better data-sharing solutions.”
Nate Herman, AAFA’s senior vice president of policy told CNBC that the problems causing the supply chain crisis are far from over.
“Now is the time to double down on bringing all stakeholders together to create and implement real solutions to structural problems so we don’t end up ignoring them all,” he said. crisis after crisis”.
Clearing the warehouse
Among the biggest challenges raised by logistics managers in the survey were shortages of raw materials, port congestion, lack of skilled workers and shrinking warehouse space due to soaring inventories. Also cited were the terminal’s rules for container pickup and return and canceled trips.
Soaring inventory has kept warehouses full, and respondents say they see a 400% increase in warehouse prices as space decreases.. That benefits consumers, who are picking up heavily discounted items as retailers try to move products out of stock.
Scott Sureddin, CEO of DHL Supply Chain, said shipping volumes were flat after Cyber Week but are now up 10% from a year ago as retailers cut prices to free up inventory.
“Customers are shopping at a discount, and we see it in the items we’re shipping. It’s higher value products like cheaper tennis shoes or T-shirts,” he said. . “I’ve never seen inventory levels like this and after the first one over the next year retailers can’t continue to maintain this inventory so the discounts they’ve pushed will have to continue.” .”
Inflation, labor pressure
Energy and labor prices are two inflationary pressures that respondents said are still driving up logistics costs. Russia’s war with Ukraine, then tariffs imposed under the Trump administration are the top geopolitical events affecting supply chains, followed by Covid.
On the labor side, respondents said they are worried about the mental health of the workforce as well as the shortage of skilled workers, which further adds to the stress. The survey results show that these are the problems: employee burnout (65%), lack of staff with the right skills (61%) and hiring to address the skills gap (75%).
“International logistics is still a human-driven business,” says Kenney of CONECT. “The survey highlights all kinds of supply chain challenges, but none of them will be solved without the right talent and expertise.”
