Inside World Trade: Tune Up Your Supply Chain

The news coming from U.S. ports is not particularly uplifting.

True, ‘glass half full’ types can take solace in the growth in exports. The nation’s two busiest container ports (LA and Long Beach) have seen a year-on-year gain of more than 23 percent, which suggests that-in addition to the scrap paper and scrap metal which typically lead the way-U.S. shippers are out-bounding more plastics, chemicals and Caterpillar tractors (to say nothing of agricultural products).

The number of empty containers shipped back to Asia from west coast ports is down more than 20 percent. As one cynic observes, makes you think that the principal American export during the ‘consumer boom’ of cheap credit and easy debt was the air in all those unfilled containers!

Imports, on the other hand, are on pace to record their second straight year of declines in overall international trade. This hasn’t happened in at least 30 years.

In the most recent period, for the six months from January through July, only two of the 10 busiest ports did more business than the previous year:  Vancouver (servicing Canada) and Savannah (the first major stop coming north from the Panama Canal). Imports off-loaded at the major west coast ports (remember the congestion problem a few years ago?) were down 13 percent.

Part of this reflects the collapse in new home construction. The biggest declines at Long Beach were such things as stone, plaster and cement (down over 15 percent). Ditto wood and furniture and bedding. But, the in-bound pipeline of consumer goods is also trickling down.

As these trends-more exports, less imports-consolidate into more permanent business conditions, supply chains must adjust. Which will be easier said than done, an enterprise supply chain (like the proverbial battle ship) being something that doesn’t turn on a dime.

If past actions suggest future ones, there’s likely to be considerable resistance to the sweeping changes required to deploy an agile supply chain. Some of the blame is organizational silos, some because of ingrained habits and practices, some from company politics and turf fights.

To better focus on the nature of the problems facing the supply chain-the challenges to production, logistics and distribution posed by a shift in the global economic paradigm-we have assembled a special report in this issue. A full spectrum of solution providers-3PLs, technology, transportation-have been surveyed by our best reporters to learn how they’re able to help customers manage supply chains in tough times.

In some respects, the sector has never been more ready to take on new challenges. The consolidation of providers has expanded their capacity to offer broad, more comprehensive solutions. Information technology, whose unfilled past promises have left users understandably skeptical, is zeroing in on platforms capable of providing visibility spanning an entire global supply chain (logistics and compliance included). The next generation of distribution centers will address the hitherto contradictory business priorities of reducing inventory while accelerating speed to final market.

True, current measures of port traffic reveal a U.S. economy moving from one paradigm to another. But, supply chain expertise and resources are available as never before with potential to moderate much of the pain and smooth out the transition to the next stage of the global economy.

Neil Shister is the current Editor of World Trade. You can reach him at shistern@worldtrademag.com.

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