RIM Editorial

Flip The Switch

Shortcuts in the supply chain was the topic of the RIM Editorial in last week’s Market Snapshot, focusing on the notion that taking the “slow shortcut” may just be the best alternative for moving freight in the current environment. This week, the switch has been flipped. Flipping the switch seems to be an appropriate topic given recent energy issues in China, another critical disruptor to the already-challenged global supply chain. Now, when you “flip the switch” on your TV or follow any mainstream news media channels, the topic of delays in the supply chain, mainly relating to ocean freight congestion, are front and center on nearly every channel. One simply can’t get away from the seemingly never-changing news about the clogged supply chain, even when a person flips the switch off. Supply chain news has powerfully impacted the mainstream media, especially as goods for the holiday season need to be on store shelves, or in distribution centers, right now in order to make it in time for the big holiday rush.

The switch was flipped when, suddenly, a global 24/7 marketplace came online with organizations like Amazon and Alibaba. The world would never be the same, even before the COVID-19 outbreak in 2020. E-Commerce, or the ability to shop online from practically any location at any time, created an unprecedented demand for goods. Nearly anything can be bought online at any time from virtually any place. Brick and mortar retailers like Target, Kohl’s and Wal-Mart simply had to get on board with e-Commerce offerings, or face being overtaken by exclusive online retailers and distributors like Amazon. The switch had been flipped on retailing as we know it, and there is simply no returning back to the days of 9-5 retailing, seven days a week. Back in the days of limited retail hours, the supply chain, for the most part, could adequately keep up with demand. Aircraft, ships, railroads, warehousing and the available labor to support the pre-e-Commerce world functioned with little disruption for years. Then, the switch was flipped and the circuits that make up the supply chain were overloaded, even before disruptors to the supply chain, such as weather, natural disasters, or a global pandemic, sent surges throughout those circuits. And so, as the world watches and industry leaders grapple with this problem, it’s a problem that is here to stay at least in the near future. Nobody is going to flip the switch off for e-Commerce for two weeks, or a month. Sure, some of the logjam could possibly be cleared in that amount of time, but can one imagine the outcome of a temporary shutdown of e-Commerce? It would mean shutting down immediate access to infinite choices of consumable goods. Even so, what good would flipping the switch off actually do? Once that switch is flipped back on, the surcharge to ship goods would suddenly become massive. And, once again, the high demand of goods would swallow the already-limited circuits along the supply chain, and the problem would return to the ports, warehouses, rails and terminals along the supply chain.

It’s easy to oversimplify and explain the issues from a 50,000 foot level. What is not easy is essentially witnessing and trying to interpret the repetitive news seen when one flips the switch on across several news channels and how to improve the issues along the supply chain, let alone solve them. Week to week, there is little change in a situation that is here to stay for the foreseeable future.  The issue comes very clear for the importer or consumer when one tries to flip the switch by attempting to buy that “necessary” product.  They will find that one retailer website is “out of stock” of that certain product or it’s on backorder for months. The consumer is then forced to flip the switch over to another e-retailer, only to find out that the product is also “out of stock,” and now without a re-stock date. The hunger by the current e-Consumer is not going to subside. Settling for the current supply chain network will continue to lead to “short circuits” and failures at multiple links across the supply chain.  E-Consumers are fed by the power of 24/7 access to buying virtually everything. Now, industry leaders, including carriers of all modes (air, ocean, rail, trucking), warehousing companies, major importers and exporters (or beneficial cargo owners), along with support from local port and trade organizations in concert with government entities of all levels, need to collaborate and address the outdated circuits along the supply chain. Those circuits simply cannot continue to feed the demand as it currently stands. The switch needs to be flipped ON, but on to the valuable resources of land, on to labor and modes of transport that need to be expanded, and on to adapting and adjusting across the entire global network in order to feed the continual buying habits of the consumer, with little or no delay in the shipment of goods.

— Kevin Krause| Director, International Product