A lot has happened in 2020. First a pandemic, then a record-breaking hurricane season. Now with the hustle and bustle of the holidays as well as a vaccine to ship across the nation, what kind of effect can we expect from the supply chain and shipping on a national scale? Dr. Benjamin Ruddell, director of a national supply chain mapping and analysis science project, shares his insight.
MWS: ARE THE GULF STATE COMMUNITIES STRUGGLING TO RECOVER FROM THE BUSIEST HURRICANE SEASON ON RECORD? WILL THE HOLIDAYS AND A MASS VACCINATION CAMPAIGN DISRUPT OR AID IN RECOVERY?
RUDDELL: Although there were many hurricanes this season, none were historically damaging and powerful. There is a big difference in damage capacity between a Category 4 (like Hurricane Laura) and a High Category 5 storm; one can damage homes while one destroys whole cities, ports, and manufacturing centers. The economic damage from a direct hit of a High Category 5 is much deeper and longer lasting. If you have half your city evacuate and never return, that’s a different kind of damage than replacing a billion dollars of roofs and drywall.
With that being said, it is always a struggle for communities to recover from hurricane strikes; recovery can take years. The coincidence of this unusually severe season with the COVID-19 crisis is a mixed blessing. It is harder to recover with the whole system and supply chain slowed by COVID-19, but on the other hand, and especially in tourist towns, COVID-19 means that there were fewer customers coming, so there is less money lost during the prolonged recovery. A mixed bag.
I have no reason to believe that the mass vaccination campaign will affect recovery. It won’t take a large amount of logistics capacity to distribute vaccines because vaccines are small and light.
MWS: SPEAKING OF VACCINES, WHAT OBSTACLES SHOULD DELIVERY FLEETS EXPECT TO SEE WHEN MOVING THE VACCINE FROM POINT A TO POINT B?
RUDDELL: The main problems with vaccine distribution are going to be speed, safety, and security. These vaccines are small, light, time-critical, extremely valuable, and need unusual cold-chain equipment and safety training. Handling dry ice requires special hazardous materials training. Also, pay attention to operational security. Organized crime has already demonstrated an acute interest in knowing exactly where vaccine shipments are warehoused and delivered.
MWS: SWITCHING GEARS, HOW HAVE YOU SEEN SUPPLY SYSTEMS CHANGE IN THE US THIS YEAR, AND WHICH OF THESE CHANGES MIGHT BE PERMANENT?
RUDDELL: There was a massive drop in freight volume early on, then a massive spike in freight volume, a large drop in exports, and then a large increase in imports from China to the US. At the March lockdown there was a massive shift in distribution logistics and contracting for food and essentials from the restaurant and hoteling sector to grocery retail. Since then, things have been slowly getting back to normal.
The main permanent changes I expect to see are: (1) an acceleration of the “re-shoring” trend bringing manufacturing back to the United States; and (2) an increased emphasis by businesses and the government on supply chain resilience and continuity. We have learned a hard lesson about the cost of relying on foreign countries for pharmaceuticals and medical equipment and about the risks created by lean and lowest-cost practices. There are several kinds of critical supply chains and expertise that must be concentrated in domestic suppliers. We are not being responsible as private or public leaders when we lose control of the supply chains that support our basic health and security—or when we fail to take steps to ensure that these supply chains are resilient and that continuity can be maintained during a large crisis. Expect a wave of reform, starting with large business, but eventually reinforced by new federal regulations.
MWS: WHAT ARE THE MOST OBSCURE OR SURPRISING THINGS YOU’VE SEEN MOVE EN MASSE THROUGH THE SUPPLY CHAIN IN 2020 DUE TO COVID-19?
RUDDELL: To me, the most interesting things have been the switch of the airlines to carrying cargo in passenger cabins, and the ramp-up of the grocery stores and the online retail deliveries to flat-out 24/7 operations. I see brown package deliveries in my neighborhood at nearly all hours, sometimes coming to my house five times in one day, and they’re using all kinds of rented trucks and vans, basically anything they can get their hands on. At the grocery store the staff restock shelves at a dead sprint, even in the middle of the 5 pm rush. You can see the system flexing; the private sector is using all the tools it has to meet demand and adapt to rapidly changing trends.
The hand sanitizer and mask shortages have been interesting but not surprising because demand rapidly ramped up above the production supply.
The toilet paper hoarding has been surprising and disappointing. There has not been a shortage of toilet paper at any point this year based on supply and demand, but people keep hoarding it, so there is a perception of scarcity. It’s time for Americans to stop doing that.
The most impressive thing I’ve seen this year is the brave effort of the people in the medical, public safety, logistics, and fresh food (produce, meat) sectors to stay on the front lines and work twice as hard to take care of the rest of us at the risk of their own health. This was especially brave in March and April when there was a lot of panic and we didn’t understand the dangers of the virus. The police, firemen, nurses, and doctors have gotten some recognition, but the truckers, warehousers, shelf stockers, pickers, and packers are really the unsung heroes of this crisis.
MWS: WHAT’S THE INSIDER’S VIEW ON WHETHER HOLIDAY PACKAGES WILL MAKE IT ON TIME THIS YEAR? WHAT ADVICE DO YOU HAVE FOR GIFT-GIVERS?
RUDDELL: I expect that things will go OK; the online retailers and logisticians look like they’re really working hard to stay on top of this. If there is a glitch, those waiting to the last minute will be the ones to suffer.
MWS: AS TRADITIONAL HOLIDAY GIFT DISTRIBUTORS AND TRANSPORTERS (USPS, UPS, FEDEX) HAVE BECOME STRAINED THIS YEAR, WHAT NEW SYSTEMS OR COMPANIES FORMED FOR SHIPPING OF GOODS AND WHICH MAY CONTINUE?
RUDDELL: Mostly I am aware of a rapid hiring expansion, increase of shiftwork, and more use of rented equipment by the existing large logistics operations rather than new systems and companies emerging. This crisis has been a great opportunity for the logistics sector to innovate and expand, and it’s mostly the big fish who have been able to take advantage early on.
I expect that the real disruptive changes will emerge in 2021-2022 in the aftermath of the crisis, as we understand the permanent changes in the US economy. My expectation is a permanent shift in work locations from corporate offices in city centers toward satellite offices and work from home in suburbs and rural areas, a surge in growth in the “zoom towns” (desirable living locations far from city centers), and a permanent decline in business air travel.
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Dr. Benjamin Ruddell is the director of the FEWSION Project, a national supply chain mapping and analysis science project funded by the National Science Foundation and operated out of Northern Arizona University where Dr. Ruddell is a professor.