23 October - 29 October
Are US Supply Chain Problems Over?
Spotlight on supply chain troubles still plaguing the US, despite some easing.
Highlights on US manufacturers’ positive outlook toward reshoring, dismal supply chain predictions for 2023, the tension in the diesel markets as prices surge due to lack of reserves, and more.
Trending discussion on concerns about candy packaging being tough to recycle, and how candy manufacturers like Mars are handling it.
Your Weekly Spotlight
Supply chain disruptions have been in the news ever since the pandemic hit, with adverse effects on freight movement across the globe. Port congestion, troubles due to COVID-19 and the Russia-Ukraine conflict, lack of warehousing space, and other such issues have cropped up consistently as we deal with the after-effects of the pandemic. But now, in the last quarter of 2022, it seems some of the setbacks are easing and going back to ‘normal,’ pre-pandemic levels.
Snarled supply chains that helped fuel red-hot inflation seem to be slowly disentangling, offering hope for relief for cash-strapped consumers. But are the supply chain troubles really over? Because the U.S. faces geopolitical tensions, a shortage of truck drivers, and a potential railroad strike that all endanger recent progress.
Global shipping container prices, a key indicator of supply chain chaos, have fallen 70% from their record high last year. While products are reaching American shores on-time more often, companies are having trouble moving goods within the U.S. due to limited trucking and freight rail capacity. Those snags have helped drive up the cost of food, which rose 13% annually, and other key goods.
Logistics experts claim that long-haul trucking and freight rail still can’t keep pace with demand for shipments, in large part because the industries don’t have enough workers. The American Trucking Association said that the industry faces a shortage of 78,000 drivers, down slightly from the 81,000 peak from last year.
Railroads, which carry nearly one-third of U.S. freight, laid off nearly 30% of their workforce in the years leading up to the recent surge in demand. That’s led to persistent delays in shipments of fresh food, fuel, fertilizer, car parts, and industrial chemicals. Meanwhile, the supply chain faces the threat of a nationwide rail shutdown in November if contract negotiations between railroads and their workers unravel!
Key Takeaway
The coronavirus pandemic initially shut down major economies, leaving companies understaffed and unprepared for the explosion of demand that followed, making products scarcer and more expensive. Soaring inflation is now forcing consumers to spend less, slowing demand and helping supply chains recover.
Clearly, while there is a positive impact of reduced demand in the form of decreasing supply chain snarls, labor shortages, production constraints, and shipping delays are very much still present. Logistics stakeholders can look forward to decreasing shipping rates, as companies scramble to let go of excess inventory, instead of ordering new stock. Supply chain problems are clearly far from over for all parties involved.
Highlights
US manufacturers are pumped up about the supply chain reshoring trend. A Deloitte report finds that US companies will reshore 25% more jobs than in 2021, leading to manufacturing goods and raw materials locally.
Supply chain experts signal a very dismal 2023 for US retailers. Just last month, October 2022, spending at retail stores fell flat as consumers continue to confront the hottest inflation in 40 years.
The diesel market is in a perfect storm as prices surge, and supply dwindles ahead of winter. Diesel prices have increased 33% for November deliveries and are expected to go higher, with diesel reserves dangerously low across the US.
When the supply chain turns volatile and the trucking market grows tough, can these alternatives to over-the-road transportation save the day? Over the past two years, as shippers have struggled to get loads on trucks and find affordable rates, some have started looking to the railroads for help.
With just 3.6% of global reserves, access to lithium is vital to the country’s sustainable energy plans. The National Blueprint for Lithium Batteries 2021-2030, developed by the Federal Consortium for Advanced Batteries, outlines the country’s plans to bolster investments in the lithium supply chain.
Trending
Candy prices this Halloween surged, leading to questions about American spending habits around the celebration of Halloween. But after the spookiness that is All Saints’ Day, there is another problem candy manufacturers and other players need to turn to – candy packaging that may be difficult to recycle.
As America loads up on an estimated 600 million pounds of candy for Halloween, a handful of companies are trying to make it easier to recycle all those wrappers. But they acknowledge their efforts are only making a small dent and say more fundamental changes are needed.
Since the beginning of October, Mars, the maker of Snickers and M&Ms, has distributed 17,400 candy waste collection bags to US consumers through its website and at community events. The bags can be filled with wrappers and packaging from any brand and mailed free to a specialty recycler in Illinois. That recycler, G2 Revolution, forms the packages into pellets and uses them to make waste bags for dogs. This recycling program, though, would still address just a fraction of the problem.
Plastic wrappers are ideal for candy for lots of reasons. They’re cheap and lightweight, which cuts down on shipping costs. But plastic wrappers are a challenge for recycling companies. They often contain a mix of materials, like foil, which must be separated. They’re small and flimsy, making it easy for them to bypass typical sorting equipment. They have to be cleaned to remove grease, oil, and other food waste. They’re multi-colored, so when they’re mixed together they come out as an unappealing brown.
Even when companies do go to the effort of recycling candy wrappers, they produce such low-value plastic that it doesn’t recoup the cost of recycling. As a result, a lot of plastic packaging ends up getting thrown away. That’s why it’s critical to have food companies or individual consumers funding recycling efforts.
