Everything in your home, on the shelves of your stores, and in your warehouse spent at least some time on a truck.

For years we were warned that if truckers stopped, we would feel it in ways that we couldn’t imagine.

Well, we’re feeling it – we are all feeling it. And they haven’t even stopped completely, just slowed due to trucker shortages. But we are all feeling it in ways we never imagined. There is something that hits you in the gut when you walk into a store and see the bare shelves or walk through your warehouse and see that nothing is moving.

We get it. At OL USA we understand that the trucker shortage is hitting everyone right now. When you consider that about 72% of American freight is moved by trucks at some point in its journey, it’s easy to see how a shortage would certainly hurt. Whether you’re a point on the supply chain or a customer, you are no doubt feeling the pinch like a new pair of shoes that you can’t quite break in. Truth is, we don’t want to break them in! We want our old shoes back!

We want our truckers back!

Let’s take a look at how we got here and what it’s going to take to find our way out of it.

The State of Trucking in 2022

If you’ve been on social media lately, the land of infinite conspiracies, you’ve likely seen some ideas tossed around about the state of US truckers. Most of it is completely bonkers so it might take a minute to sort it out.

Coming on the heels of the Great Supply Chain Disruption, thanks to the pandemic, everyone has been stretched to the limit. Ports were closed, cargo ships were stuck in the ocean, port in site, unable to unload or load. Port became overwhelmed as they turned into forests of shipping containers. It was the world’s biggest bottleneck. Nothing was moving.

This trucker problem is not new though. It’s just at its tipping point it seems. The American Trucking Associations reported that in 2021 there was a deficit of 80,000 truck drivers in the United States – a record that we’d rather not have broken.

What’s the Problem? The Reasons Behind the Shortage

Conspiracies aside, the reason for this shortage is simple – bad jobs. There are plenty of drivers.  In 2019 there were more than 10 million commercial driver’s licenses held by Americans and just 3.7 million trucks that needed those drivers.

The dissatisfaction is not new, but it has been on a long, low simmer for several decades. The 1980s saw a slight shift from lucrative business to silently, slowly plummeting industry. The Teamsters had been keeping the industry driver friendly, ensuring good working conditions and good pay, but then-President Carter’s administration thought it would be a great idea to deregulate the trucking industry – to create a little competition.

This was like a huge green light for a flood of new trucking companies to enter the arena. Problem is, it did not make the industry better but turned it into a third-world mentality with abysmal driver pay and worse conditions. Drivers had more demands but no resources or support to meet them in a way that didn’t carry dire costs to their health and wellbeing. It doesn’t help that the highway is a dangerous place. According to the DOT, a truck driver has a significantly greater chance (10 times more to be exact) of being killed on the job than the average worker in the U.S.

And as the government is wont to do, the fed spent the next several decades implementing laws and regulations in an attempt to “fix” what they broke. Less time on the road, more time in the berth, and other restrictions. On the surface, this sounds great, but look deeper and you can see that even the time constraints can leave a driver parked in the middle of nowhere on the shoulder of an on-ramp for 10 hours.

They were pushed and pushed, then they began to push back.

The pandemic hit and brought the entire freight industry to a screeching halt – or at least a crawl. This added to the stress on an already overworked, underpaid industry and it broke.

Now trucking companies are scrambling, offering extremely generous sign-on bonuses, benefits, and plenty of perks. They keep throwing incentives at drivers, hoping that something will stick.

It isn’t sticking.

What Has to Change?

If we are going to get back on track and get freight moving, things need to change. The trucking industry needs to change. Drivers need better conditions where they are not perpetually hungry, tired, and dealing with a lousy schedule. They need a work environment that is not conducive to health conditions like diabetes, hypertension, and heart disease.

Ports are slowly opening but while it looks positive on the surface, it is just added stress on overtaxed truck drivers.

What needs to happen is more drivers need to actively work in the industry.

What has to change in order for that to occur is a total revamp of trucking.

The truck driver shortage is changing the face of logistics, but there are ways shippers can manage:

Keep your bottom line in sight and make adjustments as needed.

Transportation prices are increasing as everything gets more expensive and it drives up rates. Factor in these costs and make adjustments as soon as possible to prevent delays.

Plan, plan, plan

Have a plan in place for transportation problems or challenges. Whether it’s a driver shortage or more pandemic port closure madness, try to come up with a Plan B that you can put into place quickly.

Select a transportation partner that works with you.

Not all trucking companies are created equal. Find the one that is right for you, knows your industry, and you have the confidence to get the job done. Look for a collaborative relationship and keep things moving.

Don’t let the trucker shortage bring your operation to a halt. Partner with OL USA and let us help you keep your supply chain moving. Call today to learn more.

Most people know the saying about the butterfly that flapped its wings in the Amazon which led to a hurricane on the other side of the world. Well… if you replace the bird with a bat and the hurricane with a cargo bottleneck off the coast of California, you get a pretty good sense of how Covid-19 has wreaked havoc on ocean exports since early 2020.  

The butterfly wings story is part of chaos theory, which states that ‘in dynamical systems, the outcome of any process is sensitive to its starting point.’ With the near total lockdown in Shanghai, we’re seeing this dynamic play out in ways that are complex, fascinating and challenging. 

In case you are just returning from a weeks long meditation retreat in Nepal where you have had no access to the news and no need to use your Amazon Prime account, it’s worth restating the latest facts of the situation: the Chinese government has imposed a hard lockdown across the city of Shanghai in an effort to contain a surge in Omicron cases of Covid-19. The hard lockdown started during the last few days of March and is still in full effect today. There have been incredible, and unprecedented scenes of hardship and discontent emerging from China’s famous city as residents struggle to comply with the effects of the zero-Covid policy.

And it’s not just Shanghai either. There are full or partial lockdowns in place in 45 Chinese cities, affecting a quarter of the population and about 40% of the economy. The port of Shanghai is a global key point in the supply chain and its effects are being felt around the world. 

What does this mean for ocean exports and global shipping for the rest of 2022? 

Let’s start by looking back at some of the lessons learned during the first wave of the pandemic.

The First Wave of Covid-19

No doubt the events of early 2020 are still fresh in most people’s minds. There was a new, unknown virus in China and it was spreading fast. No-one quite knew what to expect. Fear raced around the globe and governments battled to find ways to contain it.

Global trade and shipping cratered fast. All of a sudden there were factories closing their doors, shipping rates went into freefall and empty containers were simply left stranded at ports all over the world. That worldwide hiatus didn’t last long, but it led to tremendous pent-up demand and a real sense of chaos when lockdowns were finally lifted and a surge of orders for the US and Europe had to be fulfilled.

Things are not exactly the same this time around: for one thing, China has not closed all its ports. And while Shanghai is a very important manufacturing and export hub, a number of other Chinese cities will be able to share the burden and ease the logjams in ways that were not possible in 2020.

On the other hand, the world is in a far more precarious position now than it was two years ago when Covid-19 was by far the biggest problem that world of ocean exports had to contend with. Today, things are much more complicated due to the Russian invasion of Ukraine which has caused so much damage, and will do so for the foreseeable future. The price of oil has shot up, the scourge of hunger is threatening many countries that relied on Ukraine and Russia to continue being the ‘breadbaskets of the world’, and with the bruising sanctions that are growing all the time against Russia, many companies are being forced to re-imagine who their partners are and how they operate.

Nothing exists in isolation. With this in mind, we can ask what are the expected implications are of this current Chinese lockdown on ocean exports?

We have three possible scenarios that could play out over the next few months

3 Possible Implications of the China Lockdown for 2022 

1) Supply chain diversification has to happen as quickly as possible.

One of the geopolitical solutions that seems to be emerging in the wake of this lockdown is an understanding that there is a need for greater supply chain diversification away from China. That in itself should lead to far greater resilience over the medium term. After all, it stands to reason that when so much of the world’s ocean exports are tied to the fate of one nation, the supply chain will be more vulnerable than it should be. 

This is already playing out. FourKites, a Chicago-based company that tracks supply chain data, revealed recently that the volume of goods shipped by sea out of Shanghai has dropped 26% between March 12 and April 4. The volume of goods leaving the port by truck dropped 19% in the same time period.” That’s a significant drop and while immediate solutions are hard to come by, we can see supply chains diversifying over the next few years to build resilience. 

2) Will the center of gravity in manufacturing start to shift away from China?

The longer that China’s zero-Covid policy goes on, the more importers, exporters, and freight forwarders will start looking for alternatives. One example of this is the surge in ocean exports that originate in Vietnam. “Traditionally viewed as a regional alternative to China, Vietnam maintained its popularity during the turbulent 2020, and in early 2021 it was named as a top-three sourcing market by a quarter of respondents globally,’ according to SCMP Global Impact Newsletter. 

This doesn’t necessarily mean that US companies are breaking their ties with Chinese manufacturers – many of these Chinese companies are relocating to South-East Asia.  

Research firm Gartner has long predicted an exodus from China. A survey from June of last year noted that  33% of supply chain leaders had either moved the business out of China or plan to by 2023. That’s a huge shift that will have profound implications for ocean exports in the years ahead.

3) A big test is looming (once again) for California’s ports.

One of the most fascinating aspects of the supply chain disruption of the last few years has been the way in which  California has responded to the challenges. The ports of Long Beach and Los Angeles are vital gateways to the whole American economy and their ability to perform or not has global ramifications.

The first two months of this year brought some relief to the overworked ports of California as bottlenecks were cleared and the backlog of ships waiting to dock fell. This is a valuable rebound considering how bad things had gotten by July of last year. That’s when transit time to Los Angeles from China had more than doubled to 62 days. In the months that followed, the number of ships waiting to enter the port at Los Angeles had soared from under 20 to over 75 by mid-October.

The work to clear the backlog and get supply chains back on an even footing has been successful and credit must go to everyone who made that happen. But the queue of ships waiting for Southern California berths has fallen not only because the velocity of moving cargo on land has increased, but also because the volume of goods leaving China has declined. Yet at the same time, we see that imports from Asia had risen by 16.4 percent year-on-year. There is a lot of pentup demand that could be released once again. The end of the lockdown in Shanghai could swamp the California ports again in the coming months.

As we wrote in the OL Bulletin of March ’22, ‘The message for ports, warehouses, railroads, trucking companies, and equipment providers is that the vessel backlogs and choked inland supply chains will likely continue — or worsen — as import volumes accelerate during the summer-fall peak shipping season.’  

Conclusion

If there’s a single takeaway from this period of turmoil and upheaval, it’s that creativity is more important than ever. Vigilance and flexibility are required as multiple challenges mount up all fronts, from the rising cost of oil to the tricky issue of complying with sanctions against Russia, lockdowns and occasional worker shortages at various docks in the event of an Omicron outbreak

More and more we are seeing operators in the industry respond creatively; from changing the frequency of shipments, to finding ways to cut miles from distribution networks,, re-imagining partnerships and shifting freight among trucking and intermodal rail. Companies that are agile and unafraid to break the rules will find themselves dominating as the global situation continues to be re-made by events across the world. 

Exceptional customer service, live shipment tracking, and a network of agents in over 140 countries are some of the reasons why OL USA is one of the fastest growing international shipping companies in the world.  Get in touch today to discover how we can successfully manage every part of your supply chain so you can spend more time serving your customers.