When COVID-19 upended the supply chain in early 2020, few experts thought we would still be facing pandemic-related supply chain disruptions in 2022, but here we are. Though supply chain, logistics, and procurement practitioners have managed to overcome adversity in various forms over this time, old and new challenges alike continue to disrupt production and shipping operations worldwide. To avoid getting caught unaware, keep reading to explore some of the supply chain challenges shippers can expect to face this year.
2022 Will Have Its Share of Supply Chain Hurdles
Unfortunately, the new year won’t bring an end to supply chain volatility. The industry has not yet overcome many significant contributors to global supply chain disruption. Furthermore, a continuous stream of new obstacles has marked the pandemic era, suggesting that some challenges will arise this year that can’t be foreseen. Here are some of the ongoing issues shippers and supply chain stakeholders must prepare to deal with in 2022.
Ongoing Labor Shortages
A shortage of available labor has been problematic across the supply chain, with warehouses, long-haul truckers, and last-mile delivery providers all struggling to stay fully staffed. Quit rates are high in transportation and warehousing compared to many other industries, contributing to a broader trend known as the “Great Resignation” in the U.S. labor market.
Though many of those workers change jobs rather than leaving logistics and transportation altogether, the fact remains that there are not enough employees to go around. So in 2022, hiring companies in logistics and transportation will continue efforts to attract new talent through better compensation, more attractive corporate cultures, and more.
Low Industrial Real Estate Capacity
The pandemic created a run on industrial real estate as e-commerce businesses sought more fulfillment space and businesses looked to move production assets back to U.S. soil. As a result, the demand for industrial real estate far outpaces available supply and will likely continue to do so through 2026.
The pandemic has made it difficult for builders to deliver new inventory in 2020 and 2021, with outbreaks delaying countless projects. As a result, businesses expecting to expand warehousing and fulfillment capabilities in 2022 will need to start actively looking for space as soon as possible to allow enough time to locate suitable properties.
Get Ready for Automation
Chronic understaffing and the threat of Omicron and potential new COVID-19 variants mean that fulfillment and distribution centers must find ways to do more with fewer people. As logistics operations strive to build resiliency into operations, the adoption of warehouse automation solutions is rising.
To augment the capabilities of warehouse associates, companies are turning to a variety of automated and semi-automated technologies, including (but not limited to):
- Warehouse robots and drones
- Warehouse management systems (WMS)
- Artificial intelligence/machine learning
- Wearables (augmented reality)
- Automated guided vehicles (AGVs)
- Voice-controlled solutions
Big technology investments have traditionally been difficult to sell to the boardroom. However, labor- and pandemic-related concerns have made businesses more willing to spend on solutions that can guarantee additional resiliency. As a result, projections show that warehouse automation solutions will become a $47 billion market by 2023.
More Supply Chain Bottlenecks
The 2021 peak season is now behind us, but that doesn’t mean supply chain bottlenecks have gone away. As a prime example, recent COVID-19 restrictions in China will have a ripple effect on the global supply chain for months to come. Meanwhile, U.S. ports still struggle from backlogs, truckers don’t have enough drivers to keep shipments moving, and the U.S. has COVID-19 problems of its own.
Though some hope exists that the global supply chain will start smoothing out in the back half of 2022, the past two years have shown supply chain stakeholders that new COVID-19 variants, extreme weather, and unexpected disruptions can waylay recovery efforts at any time. Supply chain operators that continue to focus on resilience despite signs of recovery will find themselves better prepared for unwanted surprises.
About Phoenix Logistics
Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, founded by Frank P. Crivello, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s need.