Just as the global Chinese Communist Virus, also known as COVID-19, pandemic resulted in furloughs and layoffs due to employee illness and restrictions to slow the spread of disease, we are now facing additional furloughs and layoffs as a result of global disruptions in the supply chain.
Some drivers of supply chain disruptions include:
Business model corruption. We have seen the fragility of the JIT (Just-in-Time) inventory management scheme fail when there is a disruption in the manufacturing supply chain due to the unavailability of raw materials. This is exacerbated by JIC (Just-in-Case) ordering, which generates un-forecasted manufacturing demand that distorts the manufacturing and distribution system with a bubble that must work its way through the system, prolonging the agony.
Policical consequences. Various political issues include vaccine mandates, climate restrictions, and specialized protective legislation like the Jones Act that requires goods shipped between U.S. ports to be transported on ships that are built, owned, and operated by United States citizens or permanent residents.
Political corruption. There is an artificial shortage of tractor power units in places like California because of emissions bans that prohibit older tractors from engaging in port activities. This is exacerbated by a recently passed law demanding that formerly independent contract haulers be employed by a company, preferably a unionized company.
Political incompetence. The demand that truckers be immediately drug-tested upon receiving an alert, even though test facilities, testing equipment, and clinic capacity are woefully inadequate. No test means no license to drive. Even if you cannot be accommodated expeditiously, leaving a test site is scored as a drug test failure, and driving rights are restricted or revoked.
Corrupt union practices and work rules. Port operations are controlled and policed by the labor unions, sometimes in coordination with organized crime elements. It is not unusual to see rigid and inflexible labor practices in port operations. Well-paying jobs are tightly controlled in an environment where a Los Angeles/Long Beach crane operator can earn $250,000, a longshoreman $171,000, a foreman $282,000, and a clerk $194,000, on average.
Port operations rarely operate on a 24/7/365 cycle. It is not unusual to see “work stoppages, slowdowns, safety gimmicks, and other coercive actions” to enforce union dictates. Many California operations resist automation and the best practices found in other international ports. There are no incentives for superior or expeditious performance. Longer driver wait times in queue.
Inaccurate planning, forecasting, and inter-entity communications. With port problems, most of the planning, forecasting, and inter-entity communications are valueless. We can tell with surprising accuracy where a container might be, but it is impossible to unload a single container containing critical materials or perishable foods and drugs. You continue powering the refrigeration and air-conditioning aboard the ship and hope for the best. Also “panic-induced” purchasing by individuals can skew the best of forecasts.
Spoilage or the consequences of late deliveries. Spoiled foods and unusable or unsaleable merchandise are becoming more problematic and far exceeding those containers accidentally damaged or lost in transportation accidents or heavy seas.
Economic factors. Currency fluctuations over time, delayed payment on delivery, inflation, rising fuel prices, increased storage and cartage costs, changing merchandise valuations, on-sea transfers of ownerships, and the hedging of commodities also affect the supply chain. Costs of alternative shipping modes using more expensive air carriers.
Long-term contracts which do not allow for supply chain issues. Few companies anticipate the cost of keeping a fully-crewed and operational ship in a port holding pattern for weeks or months. For those vessels operating under fixed-cost contracts, the financial burden may be as crushing as those experienced by those manufacturers, distributors, and retailers awaiting their goods.
Logistics. The lack of container temporary storage space or warehouse space where shipments are segregated and transported to intermodal or final carrier delivery.
Future threats. There is a general lack of young recruits who are entering trucking, believe that the future includes driverless electric trucks
No matter the size or impact of the disruption, your ability to react to changing conditions demands that you understand employment risks, maintain watchful vigilance, and increase your emergency funds. Multiple independent income streams should be a necessity, and ideally, you should develop the mobility to relocate where more secure employment is available.
Change is coming. There will always be a tomorrow, no matter how much you may try to ignore it. There are no guarantees in life or promises for a bright future. Just because something bad hasn't happened yet, doesn't mean it won't. It can happen to anyone, anytime, anywhere. No one is guaranteed to wake up tomorrow and still have a job by evening. Are you now wondering, Am I Next?
