If there’s one thing that we’ve learned since the onset of the pandemic, it’s that everything can change overnight. There was no predicting just how the spread of the COVID-19 virus would impact the entire globe. For the freight transportation industry (and those who rely on it), this meant major disruptions in the supply chain.
Just how much did the COVID-19 pandemic impact the global supply chain? In 2020, 56 percent of global retailers reported that they witnessed moderate disruption in their supply chains, and 12 percent of global retailers reported that their supply chains were heavily disrupted. The Guardian reported numerous examples of this:
Medical labs are running out of petri dishes, pipettes, and similar supplies
Restaurants are struggling to get certain food items
Automobile, paint, and electronics manufacturers can’t get the semiconductors they need for production
In one instance, a Burger King in Florida had no potatoes to make french fries
It takes a great deal to navigate the ups and downs of the freight industry, and supply chains can sometimes be a major cause for concern. While we can’t predict when another disaster, shortage, or life-altering issue will occur, we can prepare for them. Similarly, we can’t know when supply chain disruptions will happen or what the cause will be, but we can learn more about supply chain disruptions and figure out how to plan for them.
Potential Supply Chain Disruptions
In some instances, a supply chain disruption is something that happens internally within a company. In 2019, the Business Continuity Institute estimated that 56 percent of organizations experienced a supply disruption every year, mainly due to information technology (IT) and telecommunications outages and to natural disasters. However, on a larger scale, systemic threats, natural disasters, and socio-geopolitical issues like regulatory changes and border closures can impact the entire supply chain.
So, what kinds of events can create a disruption in the supply chain?
Epidemic outbreaks are a very particular kind of risk to the supply chain, categorized by a long-term disruption existence, high uncertainty, and a ripple effect that expands to other parts of the supply chain. We’ve seen this with both the 2003 SARS and 2019 COVID-19 outbreaks.
2. Natural Disasters
Floods, fires, earthquakes, tornadoes, and hurricanes don’t just require small carriers and owner-operators to bring in life-saving supplies, but they can also halt production, manufacturing, shipping, and delivery of freight, impacting the supply chain at multiple steps.
3. Material Shortage
Without the proper materials, manufacturers can’t assemble products to even get them off the production line. We’ve seen examples of this during the COVID-19 pandemic when tech giants like Apple and major automakers couldn’t get access to the computer chips they need to create their devices and in-dashboard computers. This means that the entire supply chain of phones, tablets, computers, and cars has been impacted.
4. Route Disruptions and Transportation Breakdowns
Perhaps the best example of a major route disruption in recent memory is the blockage of the Suez Canal when the freight ship the Ever Given got stuck and was stranded for over 6 days. While an owner-operator in the midwest may not see the immediate implications, the cost of the blockage preventing other ships from passing amounted to $9.6 billion per day, or $6.7 million per minute. As many as 420 vessels were rerouted through the Cape of Good Hope, adding an additional 8 days to their journey. Not only did this slow supply chains, but it kept some goods from getting where they needed to go on time.
5. Political Disruptions
Ongoing political tensions between the U.S. and China have cut into the supply chain of computer chips in what has been described by some as a trade war. Since the U.S. relies on the import of all kinds of goods and products, political disruptions between countries, or even foreign disputes unrelated to the United States can impact the supply chain.
6. Factory Fires
For three years in a row, the top two events causing supply chain disruptions were factory fires and changes in ownership of supplier firms. It’s estimated that there were over 1,000 factory fires in 2020, up 67 percent from the previous year.
7. Worker Strikes
A worker strike at a factory or distribution center can impact more than just the organization they are striking against. For example, the workers’ strike at the John Deere plants in several states may impact an already disrupted supply chain. And the potential reach is all-encompassing: Without the proper equipment, farmers may struggle to harvest crops that could impact global food supplies.
Managing Supply Chain Disruptions
As evidenced by the John Deere workers’ strike, a disruption in one part of the supply chain can soon affect many other parts of the supply chain in a matter of just a few weeks, spiraling out in greater magnitude and impacting distributors, producers, retailers, shippers, and ultimately, small carriers and owner-operators.
As shared by MIT’s Management School, Yossi Sheffi, director of the MIT Center for Transportation and Logistics shared, “The second and third tier of the supply chain are usually small and cannot withstand the initial downdraft in orders. This could be a death blow for small manufacturers.”
These disruptions can impact small businesses like independent owner-operators. So, how do you handle it when there’s a gap in the supply chain?
Between January 1 and June 30, 2021, Resilinc, a supply chain risk management firm, sent out 5,425 alerts about potential supply chain disruptions that spanned 39 event categories. Of these, 59 percent were serious enough to warrant the creation of a “War Room:” a virtual platform where customers and suppliers can communicate and collaborate to assess and resolve disruptions.
The key here? When it comes to supply chain disruptions, one must act fast and be able to collaborate.
Understanding Time to Recovery
One thing to consider is the time to recovery (TTR), the time it takes for a particular node to be restored to full capacity after a disruption; an essential component of successful supply chain forecasting. This could be a single supplier facility, a distribution center, or a transportation hub. TTR can then be applied to every other part of the supply chain, to understand how long it will take for the full supply chain to recover following a major disruption.
Stay in Communication
When it comes to managing supply chain disruptions, clear communication is key. If you manage a small fleet, your entire team must speak with one voice. You may want to establish an emergency management center to centralize your decision-making process. During COVID-19, this may have to be done virtually. Additionally, you’ll want to “swim in your lane.” Meaning you want to make sure you’re making decisions that won’t have major repercussions for others.
Most importantly, staying in communication means prepare to manage customer demand, which as a small carrier or owner-operator, refers to brokers and shippers, and plan for how you will recover as a small business.
Come Up with a Plan
As a small carrier or owner-operator, you may want to conduct a risk assessment and make changes to find out how you can prepare for the risk of a supply chain disruption. One way you can mitigate risk is to diversify your freight mix. When you work with Xpress Technologies, you can access various types of freight across the country, which allows you to effectively plan for potential gaps. With the Xpress Technologies App, you can actively seek loads that will diversify your freight mix; you can also work with an Xpress Technologies Carrier Xperience rep, who are market experts and can assist with your freight diversification efforts by helping you find the right freight opportunities.
Carriers “must focus on planning, innovation, and building resiliency to remain competitive,” and the best way to do that is to come up with a plan. In today’s world, this also means implementing technology solutions that can help you find freight and navigate difficult times.
Your Partner During Supply Chain Issues
While you can never fully plan for a supply chain disruption, you can be prepared for when they occur.
The Xpress Technologies App allows you to build a schedule that fits your needs when it’s convenient for you. Backed by our brokerage team, we are there to help you work through issues as they arise.
The Xpress Technologies App connects to your favorite navigation tools to help you avoid route disruptions. While we can’t control the whole supply chain, we make it easier to share updates on delivery times and see the market rates for freight. To learn more, connect with our Carrier Xperience Team today to discover the Xpress Technologies difference for yourself.
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