Supply Chain Challenges Continue to Build
While the U.S. economy continues to recover, the challenges facing supply chain executives continue to mount. In our “do more with less” world, retail executives are charged with making sure they have the right product in the right place at the right time, all along the supply chain. Today’s retailers are definitely stepping up to meet this new demand, but there are many complications that executives must overcome to ensure they are able to continue to perform as customers expect.
Many are occurring right in our own backyard at U.S. ports – a critical link in the global supply chain. The millions of jobs that rely on the efficient movement of goods into and out of the country are critical to the continuing recovery and overall U.S. competitiveness in the global economy.
The labor factor
The biggest challenge over the past year has dealt directly with labor at the ports and ongoing negotiations between management and unions on new contracts dealing with productivity and efficiency. Prolonged contract negotiations between the International Longshoremen’s Association and the United States Maritime Alliance created the continued threat of a strike that would have impacted all container ports along the East and Gulf coasts, from Maine to Texas.
While that strike never occurred, there were at least three real threats with negotiations going right down to the deadline before the contracts were extended. Retailers could not wait because of that uncertainty, however, and were forced to implement expensive contingency plans to make sure their goods got to market.
Many were not so lucky during an eight-day strike impacting a majority of terminals at the ports of Los Angeles and Long Beach over a long-running negotiation between the clerical union and management. Contract negotiations stretched over two and a half years before we saw the labor action. Occurring right after Thanksgiving, this put many retailers in the position of trying to ensure last-minute holiday shipments made it to store shelves.
Labor issues aren’t the only obstacles facing ports that will impact retail supply chains. Ports continue to experience congestion and long turn times, impacting truckers’ abilities to get in and out in a timely manner to ensure deliveries. This is an essential issue that all supply chain stakeholders need to work through.
The latest challenge facing supply chain executives at the ports is the immediate budget cuts across all government agencies as a result of sequestration. The most immediate impact is on U.S. Customs and Border Protection, which has already announced the immediate elimination of overtime pay and furloughs throughout the agency beginning in April.
According to Department of Homeland Security secretary Janet Napolitano, the cuts will result in potential delays of up to five days for inspections at the ports. The immediate overtime cuts impact staffing of the Radiation Portal Monitors that every container must pass through before exiting the port. These cuts mean the monitors will effectively be shut down for a brief period of time each day, during which cargo won’t be able to move through the ports.
While there are many other concerns facing today’s global supply chain, these are definitely the most immediate that NRF is hearing about from its members. These and other challenges and opportunities will be discussed at the NRF Global Supply Chain Summit, May 19-21 in Dallas. For more information or to register for the Summit, please visit http://events.nrf.com/supply13.