Coronavirus has continued to rock the American supply chain and economy.
The extreme demand for necessities like groceries, cleaning products, and toilet paper — combined with government regulations that close or limit non-essential business operations — caused consumer goods to fly off the shelves and retailers to place more orders. We saw distribution centers prioritize essential items in an effort to keep up with consumer demand and we saw warehouse backlogs create bottlenecks, which overloaded the trucking industry.
Shipping Facility Wait Times
Truck drivers experienced a 13.6% increase in wait times last week. The average unload/reload time at shipping facilities in the United States was 159 minutes, a number that exceeds carrier thresholds for detention times by almost 40 minutes. Atlanta’s average wait time rose to 277 minutes, while Philadelphia’s climbed to 322 minutes.
With trucks stuck in lines at distribution centers, drivers struggled to deliver loads on time. Carriers had little choice but to charge detention fees and raise prices to cushion themselves for lost hours. Furthermore, shipment delays caught the attention of the federal government, and President Trump took action to get critical freight to hospitals, supermarkets, and drugstores as fast as possible: He lifted hours-of-service (HOS) laws, which limit the amount of time truck drivers can spend on the road, for drivers who carry food, medical supplies, and other necessities.
Just-in-time Production: Cons
Heightened demand caused by panic-buying also revealed the cons of today’s supply chain methods, with low levels of inventory rendering retailers helpless in a system that favors just-in-time production and forcing them to ration or completely sell out of stock.
Our nation has become so efficient at producing and shipping goods in just-in-time fashion, that uncontrollable factors — like bad weather and, yes, massive spikes in demand due to a pandemic — expose gaps in the supply chain. (The plus side of just-in-time production is, of course, cost savings for manufacturers and logistics companies, which they can pass on to consumers and shippers in the form of lower prices).
The just-in-time system eliminates the need for businesses to manage large quantities of inventory, which saves costs on warehouses and allows them to focus their efforts on orders that come through in real time.
The jump in consumer demand as a result of coronavirus demonstrated the problem of stocking items just in time: It’s more tangible to consumers when supply can’t keep up with demand (read: empty shelves at grocery stores).
Business Categories Affected by COVID-19
There have been some obvious winners and losers in today’s environment. Industries that have flourished include:
- Consumer packaged goods (cleaning supplies, hand sanitizer, etc.)
- Plastics and packaging
- Paper (toilet paper, paper towels, etc.)
- E-Commerce (food delivery services, social media companies, retailers, etc.)
- Biotechnology, due to the vaccine race
Other sectors have struggled, like:
- Restaurant (bars)
- Entertainment (casinos, movie theaters, sporting events, theme parks, etc.)
- Travel (airlines, cruises, etc.)
- Hospitality (hotels)
- Fitness (gyms)
- Car manufacturers
- Oil and gas
It will take time to see the coronavirus economic impact and how coronavirus supply chains evolve. The situation has lots of moving parts, making it hard to predict how the logistics landscape will look more than a week or two out.
That said, Flock Freight® is constantly monitoring the freight market. We’ve been listening to drivers as they describe increasingly scarce meal, lodging, and rest options. Drivers have been working long hours, sacrificing time with their families, and putting themselves at risk to deliver essential goods to our communities. To show our support, Flock Freight is providing drivers and their families with warm meals, as part of our Driver Care program.