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June 2022 Supply Chain News You Can Use

U.S. Logistics Costs Up by 22.4%

Key Point: 2021 business logistics costs rose 22.4% over 2020 costs, according to a recent report to the National Press Club by the Council of Supply Chain Management Professionals (CSCMP). That report pegs 2021 logistics costs at $1.85 trillion — 8% of the nation’s $23 trillion GDP. 

The lead author of the research had this to say: 

“What is notable for 2021, however, is that the logistics sector has begun to implement changes which should benefit manufacturers, retailers and consumers alike. We’re especially heartened by the progress the sector has made in multi-shoring and last-mile delivery, both of which should quicken delivery schedules and, in the long-term, reduce logistics costs for all parties.”

Major findings include business inventories are down near historic lows, last-mile delivery volume is increasing, trucking costs rose to $831 billion, and more. Get the full scoop here.

Is the End (of the Semiconductor Shortage) Near?

Key Point: After two years of shortages, there are signs the semiconductor supply/demand ratio is improving. 

Could it be that increased production, new facilities, or technological breakthroughs have doubled the manufacturing capacity? 

No. 

Supply/demand is more favorable because demand has dropped. 

Find out why in this article.

A Damier board of management member put it like this: “It’s not perfect, but it’s better than last year. I try to not celebrate too early. We’re still monitoring the situation closely.”

Supply Chain Security Goes Deeper Than Technology

Key Point: “Security,” says one cyber security expert, “has many pillars and it includes places and people, not just technology.” Forgetting that point can open a company up to great harm.

The expert makes a case for redirecting some of the focus to issues like making sure IT managers take systems offline for patching, investing in “human issues,” and adopting a multilateral approach to supply chain security.

Consider this quote from the article: “Many organizations don’t even have a list of who they share info with and even fewer know what onward sharing agreements are happening with other third parties.”

Suppliers are often given too much access, and human cultural failings must be addressed. The threat is more than external.

Retailers Need “Frenemy” Networks

Key Point: Here’s a concept worth considering: What if retailers pool their funds and forget competition — at least where last-mile delivery is concerned? 

American Eagle Outfitters’ chief supply chain officer (CSCO) told attendees at a National Retail Federation conference that cooperation and shipping consolidation could save shippers 49 million delivery miles, $40 billion in transportation costs, and a 30% reduction in the carbon footprint every year. 

“Sharing and consolidation is the way,” said the CSCO, “just because we have abundance doesn’t mean we should use it.”

President Biden Signs Ocean Shipping Reform Act

Key Point: After witnessing two years of port congestion, container stagnation, and skyrocketing shipping costs, Congress said the Federal Maritime Commission (FMC) needs sharper teeth. 

The Ocean Shipping Reform Act of 2022 is aimed at helping flatten the inflation curve by addressing issues that push delivery costs up.

The FMC commissioner responded, however, with an ominous warning: “A lot of the problems are really problems of supply and demand, and those may be beyond the ability of any agency to handle.”

BONUS CONTENT

Google harnesses Maps to enter the last-mile market

JB Hunt reports rising demand for trucks due to rail shortages

Amazon to invest $1 billion in Logistics and Robotics Companies

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