A Look At The Supply Chain Issues

David Trammel's picture

I have little experience in the over the road part of the supply chain. I have though worked for a company (2013-2019) that shipped over a million pounds of metal products to local customers and got to talk to quite a few long haul drivers. Many of whom had stopped driving long haul because of the problems mentioned in this article.

"I’m A Twenty Year Truck Driver, I Will Tell You Why America’s “Shipping Crisis” Will Not End"

I have a feeling that supply issues and stuff on the shelf, is going to only get worse over the foreseeable future, especially thru the holidays.

One thing, the small number of exit lanes at ports, I believe is due to Homeland Security. They scan/xray/detect for radiological sources (like terrorist bomb) containers as they leave the port. That equipment is very expensive, so there isn't that many at each port.

David Trammel's picture

This person manages a big box distribution center, his take on the article. I've replaced the name of his company for privacy:

"OK - first off, the OP gets the status quo mostly right. It's a hot fucking mess. Biden leaning in will have little impact outside of massive steps like using the army to move trucks and freight around, which they are actually really good at - a lot of my team are former logistics officers. Its just too constrained. That's a weird use so some background: the Theory of Constraint (ToC) is how I solve about every process problem -you look at the process from end to end, identify the (constraint) and solve it. That almost certainly exposed the next constraint, and you keep playing whack a mole until the system / process is performing like you want it to. I find this work very mentally satisfying and why have stayed working at Big Box so long and how I have risen to the level that I have (Site director of a large distribution center outside of California).

My place in the supply chain is very close to end (customer) but I am familiar ish with the other components. Port capacity is limited by cranes - probably the first constraint, but as the OP writes, that just leads to other constraints like chassis, rails, warehouse workers (etc-and warehouse space) truck drivers aren't the constraint currently, they are like probably 5 down the list, but the challenges for contract drivers are real and there's a reason most are first generation immigrants. Again, OP got that right. He also is right that it won't unstuck itself anytime soon, but in my opinion he gets the root cause probably wrong.

I don't think this is an experts problem. I'm an expert in only one section of this, but even I can see where the issues are, but I can't fix it. I think it's a system problem. Supply Chains have governing bodies, but they just make the rules--he mentions a lot of them: truck drivers can only drive 10 hours a day (before that law, freeways were slot scarier at night due to exploited drivers), containers/Port trucks must have RFID (to track shipments prior to customs - think containers of mustard gas or a dirty nuke or even just infected wheat or faulty toys), etc.

But no one is saying - ports have to have "X" million cubic meters of capacity per day and process at "X" cars per hour rate at a railyard across the entire country/world. The market 'figures it out'. And, while I am no unconstrained capitalist, it will-- in time. Probably a LOT of time. Markets lag based on signals. The signals in 2020 were to shed capital and labor because the economy kinda just STOPPED. And then now, the signals, especially here in the US where Covid is Officially Over according to basically everyone (sarcasm), is the economy is HOT. When I say HOT I mean like unprecedented HOT-- Big Box has grown 20 years worth of growth in 18 months.

Most big box retailers that figured out drive up or service people at home (Hardware stores) and have deep pockets to respond have seen similar. So the end of the supply chain is now waking up BIG TIME. So think of the supply chain like a long jump rope-- 18 months ago the buying end basically stopped. that side of the rope went slack, and eventually the other end got tired of moving by itself and also stopped. Now the buying end of the rope is moving again-- but even faster than before, and in places MUCH faster than before. The manufacturing / Port / shipping end is trying to catch up. Manufacturing kinda did. The middle part is now a hot mess- the ends aren't in sync and the middle is getting all Tangled up and ain't no buddy doing any Double Dutch. Eventually, just like a knotted jump rope, it will get untangled, and the ends will get back in sync.

That will likely start to happen to some extent after Christmas as demand drops, but we need like 5 more centers as big as mine-- they take 2 years to build. A store takes about 1, and a Port or railyard takes decade or more, even if you can get past all the NIMBYs which won't happen for ports- they are awful places and everything shoreline is mega expensive an built up. I actually think this will lead to a resurgence of domestic manufacturing which you are already seeing in computer chips and other high tech commodities like EV batteries. There will also be a power grabs by big corps (Walmart, Amazon, Target, Home Depot, Lowes) having to expand well outside their core business to ensure their core business can work. Empty shelves at a store is a store problem, even if its a Port or Rail problem.

So we, and others, literally bought and chartered our own container ships so we can unload them where we say WHEN we say. Amazon now has like 4 zillion delivery trucks-- not because they wanted to, but because UPS / FED X didn't have the capacity and service the need for speed/quality (and also cost). Home delivery is what we call "Final Mile" the part from the distribution center to the store is called "Middle Mile" (Walmart owns it's own trucking fleet already) and from the manufacturer to the Distribution Center (usually owned by the Corp) is called "First Mile".

These are obviously more names than real distances, but you WILL see Retailers move into the First Mile space and Manufactures like Tesla, GM, Ford leaning more into their First Mile manufacturing to solve their problems (1,000,000 in nearly finished cars and trucks awaiting parts-not a typo). This will create opportunity and a lot of disruption. Both as Corps get bigger and bigger, but as old Boomer businesses what can't/won't change get forced out by innovators meeting new needs. Drones large enough to fly to a ship and drop containers on a chassis 5 miles inland? All the tech exists now, it's just waiting for a business need-- which is here now. None of this is good for climate change (a crane is way more efficient than 1000 huge drones) or cheap or easy, so we will see what happens.

So none of this will happen fast- the solve will be years in the making. It will have VERY strong inflationary pressures- both on retail and on wages (my warehouse team now started at $23.50 with $6 in increases over 3 years- up $4 starting in 9 months). Because supply is constrained and will be for a long time for both goods and services, and demand is MEGA high. That will mean innovation, and that means inflation. Look at the price of used cars if nothing else. That inflation will then work to add weights to the jump rope to slow it down... but of course causing other problems and injuring all kinds of people- jumpers and holders alike. Should be very interesting... i.e. 'may you live in interesting times'

Buckle up.

This is fascinating. Thanks.

David Trammel's picture

Pygmycory, there's a old military saying that is applicable way beyond warfare that says,

"Amateurs talk strategy, Professionals talk logistics."

As much as armchair soldiers love heroes swinging swords and clashing shields, the old grisly non-coms know its the people who supply the swords and hand out the shields who win the wars.

I'm shocked honestly that the first big downwards stair step of collapse is all about supply chain issues. I would have bet twenty years ago it would have been a war or huge oil shortage, or even a pandemic. We had the pandemic and while it did a number on us, it seems to me that most of the damage the pandemic caused was self inflicted by politicians and people trying to use it for their own gain.

The current supply chain issues though feel like they are causing real long term changes, from the redistribution of power in the worker/employer dynamic, to the real conversations about bringing manufacturing back to America, to the wake up call for so many of the 90% or poor and working class to the need to take charge of their own resilience and prepare for a chaotic life.

There is a lot more to what's going on now than the 60 second sound bites on the News and social media.

David Trammel's picture

One of the Youtube Vloggers I like, is Beau of the Fifth Column. He talks about the recent media and political talking point of "bringing the supply chain back to America".


I hadn't thought much about the issue but giving it thought now, I can see his point that if we brought production and manufacturing back to the United States exclusively, we would then be subject to a centralized distribution chain, that would be susceptible to any disruption, from wild fires in the West, to blizzards in the Midwest, to hurricanes in the South. By keeping the supply chain global, it would allow goods to flow even if there was a regional disruption.

I recognize his argument, and can agree with some of it, but I do think that we've outsourced too much of our manufacturing overseas. We just have to look at the way the start of the pandemic in China, shut down the flow of goods to the US.

There is probably a middle of the road option.

I think there are at least a few dimensions to consider since any one of them can make a supply chain fragile: length, as in the number of steps between you and the source; diversification of sources, as you mention; and how much of the available capacity is being used

I'll take my chances with more manufacturing inside CONUS and less imports. Keeps jobs and money within the States.

As for how to ensure fewer disruptions in case of hurricane, flood, etc.

Local warehouses at the store level. We used to do this. I remember working for Nichols (similar to K-Mart and long since dead) back in 1979. The store had a HUGE warehouse attached to one end of the building. It was stuffed with merchandise waiting to be put out onto the sales floor. Cosmetics had it's own mini-warehouse next to the selling floor, crammed with floor to ceiling shelves full of health and beauty waiting to go out on the floor. The display tables had cabinets underneath, again for storage.

This method is labor-intensive and relies on a longtime cadre of trained and caring employees who know what's in those cabinets and shelves. When retailing started firing full-time sales staff and relying exclusively on cheaper, part-timers, they lost a lot of knowledge and skills. One of the ignored skills was inventory control.

David Trammel's picture

From Time:
"The Truck Driver Shortage Doesn’t Exist. Saying There Is One Makes Conditions Worse for Drivers"

"In reality, there is no shortage of people who want to get into truck driving, nor is there a shortage of people who have obtained commercial driving licenses (CDLs).

The stories inevitably cite a report from the American Trucking Association that says the industry is short 80,000 drivers and quote experts who blame the alleged shortage on a lack of people interested in these difficult jobs. Yet, in California alone, there are 640,445 people who hold active Class A and Class B commercial driver’s licenses, according to the Department of Motor Vehicles. Meanwhile there are only 140,000 “truck transportation” jobs in the state, according to the state Employment Development Department.

Those numbers speak to the fact that there are hundreds of thousands of people who become truck drivers every year—some with their training subsidized by the government—only to find that the job pays much less than they’d been led to believe, and that working conditions in the industry are terrible."


I wonder how many other licensing and training requirements will be loosened as business leaders complain about no workers applying for jobs in their industries are the reason for disruptions and slowdowns, when it is their own policies, pay and work conditions that are the cause?

BTW when I saw a large truck before this year, I've always given them a wide safe distance. Mostly because of how I know their characteristics for turning and stopping. Even more so after finding out many newer ones have any collision radar now which will lock their brakes up if someone swerves in front of them too close. Now with the loosening of hiring and training criteria, I'm giving them even more room.

Be safe out there people.

David Trammel's picture

The previous linked articles have focused on the "hardware" side of the supply chain problems, but there is no doubt a "managerial" component as well. Much of the pressure to handle problems gets dumped on middle managers, those immediate supervisors who are both employees and leadership. When you are having both sides complain to you about conditions, and have the stress of handling both children and aging parents, you can't help but get burnt out.


"Why millennial managers are burned out"

"When she applied for a promotion at work last year, Lea, a 25-year-old from Pennsylvania, US, was confident she could do the job. “It was a middle management role at a non-profit media organisation, essentially managing the team I was already on,” she says.

She got the promotion and a pay rise, but things went rapidly downhill. Lea, who is withholding her surname because she still works at the same company, was soon feeling overworked. This led to physical and mental exhaustion. Every day became a struggle.

“Everyone has their work woes, but I really liked my job before I was promoted, and suddenly I really didn’t anymore.” After just nine months, Lea resigned from the position. “I didn’t realise until I stepped away just how much I’d really taken on,” she says."