The 2:00 Minute Warning

I know, I know. Some of you may be reading this headline and thinking, "The storm clouds aren’t on the horizon, they are right on top of us!"

With that thought in mind, you need to know there are some things going on that may make 2022 another very challenging year for shippers. For the past year I have had the privilege of chairing a network of a couple of thousand CEOs and Presidents who primarily run manufacturing and distribution companies. Most of these individuals run companies that are having issues – with some of them being severe issues with their supply chains.

That is why we put together a series of classes with our friend and MIT Professor, David Simchi-Levi that deal with managing supply chain risks and how companies can build resilient supply chains. The first session was packed with great insights – some of which were covered in an interview we conducted with David last year. (You can listen to our past interview with him here.)

In assessing supply chain risks, David noted that companies need to look beyond KPIs and focus on KPPs – Key Performance Predictors that are based on looking to the future and identifying things which could impact your supply chains. The impact that these things will have or are likely to have will vary from company to company.

But make no mistake about it, as shippers look to 2022, there are some very important “predictors” that must be considered when it comes to near-term concerns for the supply chain. First, pay close attention to whether the Biden Administration will grant the American Trucking Association’s request to waive the vax mandate for truck drivers.

Politics aside, the American Trucking Association and another major trucking organization, the Owner Operators Independent Drivers Association, are predicting that we could lose as many as 70-80,000 truck drivers if the waiver is not granted. This is on top of the shortage of about 80,000 drivers that sources like Transport Topics estimate are missing from the industry due to early retirements and slower training schedules. The impact of mandates may also be seen at the ports and warehouses.

Another concern is rising gas prices. These could drive your fuel surcharges through the roof at a time of already escalating rates. As long as tight capacity and high transportation demand continues, we expect to see gas prices rise or stay elevated.

And as we progress into 2022, there are many considerations that shippers should understand and factor into their planning process: things like the union (ILWU) contract at the West Coast ports that expires in July, AB 5 (which is legislation that affects independent contractors), and parcel networks that are very flush with freight. You can help protect your supply chains by creating a contingency plan that considers various scenarios about issues or events which could affect your operations or ability to satisfy your customers.

With all these issues at play, if your company could use help building a contingency plan or gaining a better understanding of the market, we encourage you to get in touch with us. We have a wealth of information and a ton of experience we can share with you.

BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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