Kevin L. Jackson, Host of Digital Transformers on Supply Chain Now is interviewed by Brent Jabbour and Ben Swann of "Boom Bust". This interview discusses supply chain constraints, inflation, and the economy struggling to recover from the pandemic.
Ben Swann: Well, this is Boom Bust, the one business show you cannot afford to miss. I'm Ben Swann.
Brent Jabbour: I'm Brent Jabbour in Washington. Here's what we have coming up. The holidays are just around the corner and the supply chain situation isn't looking great, which [00:00:30] might force consumers to change holiday shopping habits. We'll talk about what we can expect this coming season.
Ben Swann: Then speaking of supply chain constraints, coupled with inflation and the economy struggling to recover from the pandemic, how does the highly lucrative of holiday retail season look? We'll discuss this with our panel. We have a packed show today, so let's get to it. We leave the program with something that we have heard so much about recently, strained global supply chains have contributed to rising prices. They've also made it very difficult to get products [00:01:00] as we head into the crucial holiday shopping season.
Brent Jabbour: Retailers and consumers alike are feeling the impact, whether it be goods stuck at ports, or sitting in warehouses waiting to be delivered. Analysts predict supply chain disruptions will be here beyond the holiday shopping season, leaving shoppers with numerous out-of-stock messages well into 2022. Joining us now to discuss the latest in the supply chain crisis, this is Kevin Jackson. He's the host of digital transformers on the supply chain. Now, thank you so [00:01:30] much for joining us, Kevin. Now we have heard a lot of different reasons for these supply chain issues. What are the reasons you are seeing?
Kevin Jackson: Well, first of all, thank you for having me on the show. But as a whole, the industry has not responded efficiently to technology trends. This includes a failure to expand their multichannel and omnichannel customer support capabilities. Supply chain channel planners [00:02:00] really need to have visibility into their entire supply chain situation to ensure the efficiency of production programs for on-time delivery and enhanced customer satisfaction.
Ben Swann: Yeah. So, Kevin, we're talking about these supply chain issues. They really kicked off at the beginning of early October. Right? But let's go back even before that, because really into the summer, we saw started to see this pile-up of shipping containers really off of [00:02:30] two ports. It's the port of Long Beach in the port of Los Angeles, right? These ports obviously have been clogged up now for months. We have, I'm getting some numbers here just in the most recent numbers, 84 shipping containers that are now sitting in the water waiting to get into port, which by the way is now a new high. So it's not like that's gotten better. 65,000 shipping containers are in port, but are empty and they can't get back out. So what we see is this continued struggle right now in terms of how much [00:03:00] this funnel has been clogged up. It doesn't seem to be getting better. Even though there's a White House task force that's been assigned to this, even though the rules surrounding the time that these ports are open has changed.
Ben Swann: Why is it taking so long to get this particular situation in Long Beach, in Los Angeles? Why is it taking so long to fix this?
Kevin Jackson: Well, it's really inadequate planning and forecasting and a dependency [00:03:30] on using what's happened in the past to predict what's happening today. That sort of looking in the past is not helpful because the present has changed. Before these [inaudible 00:03:48] expect a normal consumer, but consumers have been nothing but normal. There have also been huge shifts in governmental regulations [00:04:00] that have been driven by changes in pandemic protocols due to localized surges and rapidly changing travel restrictions. This has, in turn, caused huge fluctuations in transport costs. Shipping container costs, for instance, have exploded 500%-800%. Also the container and yard management factors, like port congestion [00:04:30] that you just talked about, and labor shortage for truck and rail transport have really hit the industry hard.
Brent Jabbour: I'm going to kind of propose a question to Ben here because we have talked about this issue at great length on this show and sometimes Ben Pierce is an analyst so I'm just kind of set that up for you here. But Ben you've often contended that this number one is less of a global supply chain, it's more of a [00:05:00] US supply chain issue. There's one thing that you've kind of pointed out many times is to solve this problem we could get them off of the West Coast ports and move them into say the Gulf of Mexico and Florida. How do you see that working?
Ben Swann: Yeah, well there's a couple of things I think are fairly interesting here. One is that 40% of all shipping containers that enter the United States come through these two ports, as we mentioned before, the Port of Los Angeles and the Port of Long Beach. So that's obviously just a problem in and of itself to have so much of these cargo containers [00:05:30] coming through such a small geographical area. But here's the thing, I just mentioned, 84 container ships are now sitting in the water off of the coast waiting to get into port. Now, the question that I've posted before is why not reroute many of those container ships to other locations? Send them to Florida, send them to the Gulf of Mexico. Why not move them to other ports where it would make sense to get them in? I've actually checked how long this would take, it takes two weeks.
Essentially from Los Angeles, you go down through the Panama Canal, [00:06:00] come back up on the other side and now you've got Florida and you've got the Gulf of Mexico. I guess, Kevin, let me then take Brent's question and I'll toss it to you. So I've been saying this for weeks now, why doesn't this happen? It makes perfect sense to me that it would happen. Why are these ships continuing to wait? Because some have been waiting for months and with 84 container ships sitting there right now, we're talking about, what, another six months worth of unloading to take place? Why not move them to Florida? Why not move them to New Orleans? Why not move them to [00:06:30] the Gulf Coast and get them into ports so they can start to be distributed around the country?
Kevin Jackson: Well it's more than just getting the ship to a port. The port has to be prepared to accept that ship. That's called infrastructure. You need to be able to offload the containers. You need to have enough people to offload the containers. You have to have a Wharf that's [00:07:00] actually large enough. Some of these container ships can only go into specially designed ports. Also, some of these ships have huge drafts. So if you look at the amount of water the ship needs in order to just get into the port, it may not be available. So there's a lot more than just moving to another port.
Ben Swann: So let me ask you this real quick though, is there any reason to believe that there are no other [00:07:30] ports that can do this? The only reason I'm asking this, I know that Florida Governor Ron DeSantis has made several statements where he says, "Look, Florida's ports are open. We can handle this. We have the ability to. We have the crew and the staffing." Remember when President Biden mentioned that the port of Los Angeles and the Port of Long Beach were going to be open 24 hours a day and they were going to be staffed differently than they had been in the past seven days a week. DeSantis says in Florida, that's already the case. All of their ports are already open 24 hours a day, seven days a week. I'm just curious. [00:08:00] Do you know that these ports couldn't handle this?
Kevin Jackson: So I don't know if the ports couldn't handle it, but each of the companies themselves may have internal restrictions that may prevent them. Remember, these companies have not been prepared to actually transition to different ports. That is an issue, there should be much [00:08:30] better of advanced planning. There's also been a big shift with respect to off-shoring. So this issue is really driving a lot of changes in decisions with respect to the sourcing of these products. The other thing is that many organizations only have single suppliers as opposed to having [00:09:00] multiple suppliers that can provide the needed products from multiple locations. Both off-shoring and near-shoring needs to be addressed.
Brent Jabbour: I want to go ahead and bring in another guest here, Brittain Ladd, global strategy and supply chain consultant. He's joining us now as well. Now, Brittain, we're talking about this solution to all of the world's problems when it comes to global supply chains and whether or not we can move some of these container ships that are basically [00:09:30] parked off of the port of Los Angeles and Port of Long Beach. Can't we move him somewhere else? Whether that be to the East Coast or even north, what do you make of this?
Brittian Ladd: Certainly, no. I agree with what our guests have been saying that it's a challenge to do that. He's right. Some of the ships have too shallow of a draft. There's also the fact that some of these ships are too large to pull into these ports. But the big thing is this, I have spoken with the Biden administration, I've spoken with the press about this. [00:10:00] The thing that I've recommended to them is that they need to fix the problem where the problem exists, and that is the West Coast. What I've argued is that there is no reason why the US military cannot be asked to be involved in this, to where they provide the trucks, the trailers, the drivers, and that special permission be given to a lot of the drivers currently serving in the military to be able to drive these trucks without the appropriate chauffeur driver's license that many of the civilian drivers have.
I'm [00:10:30] not talking about putting them on the interstates or anything like that. But be able to have them work at the ports, be able to have them helping get these containers unloaded, dredging these containers to local transload facilities, and things like that. Because what I've argued to the Biden administration is that this truly is a crisis. This is not a problem, it is a crisis. The military absolutely should be able to assist and take care of this. The other thing that I wanted to [00:11:00] stress and I've stressed this to the Biden administration, is that the other ports are now starting to get a tremendous backlog. They too are starting to fill up. The last thing we want as a country is a port system that is unable to unload ships, unload the containers. This should have been already fixed. So my advice to the Biden administration remains, get the US military involved in this and let's set a goal of having those ships unloaded within a matter [00:11:30] of a month or two, not six months or anything like that. This really is a much bigger crisis than people realize.
Ben Swann: When you talk about getting the US military involved, let's be clear, that's a different proposal than the proposal that's been made about getting the National Guard involved. Obviously when National Guard comes in, many of those men and women would already be truck drivers in their civilian life and then they also work in the National Guard. You're talking about active duty military to be able to transport goods and to be able to move the empty [00:12:00] shipping containers, correct?
rittian Ladd: Correct. Now they certainly would be supported by the National Guard, but here's the problem, I've done an evaluation of the available guard units and there simply is not enough civilian truck drivers that are within the guard units. So we're actually looking at a smaller number of people who could assist with this. But also when I'm talking about the US military, I'm talking about giving this problem the attention it deserves. This is not something [00:12:30] I believe is really best set up for the Guard to handle. This is something where I say President Biden should have an executive order work, with the department of defense, the secretary of defense, and say, "Let us allocate the necessary men, women, and equipment to get those containers unloaded off those ships, get those containers out of the ports."
The big problem no ones talking about is there several 100,000 containers sitting right there in the ports today. So they're actually running out of room to bring off containers [00:13:00] and put into the port. So we've got to clean that backlog out. Being able to leverage military equipment to do this and allow these trucks to operate on the roads, which they're normally not allowed to do except in times of national defense and war. So I say, give them the authority they need to do that. This is really a great opportunity for the Biden administration to do something good and have the military help them and say, "We're cleaning this up. We're cleaning the other ports up. We're going [00:13:30] to do it in a way that's a little extreme to some people." But I've analyzed this. This is what I do for a living, I run models and I basically do a research on these topics. I served in the Marines for six years.
So I've been involved in these types of operations before. To me, this is not best suited for the National Guard and Reserve. This really should be active duty military. One other thing, in addition to the problem at the port, we're also running into all kinds of shortages in the stores. I've argued to the Biden administration that we [00:14:00] need our own version of the Marshall plan, where in World War II we flew all kinds of products to Europe. We need to leverage our military to go around the globe and be bringing a lot of the products we're running into shortages of here now and let's start stockpiling those. I don't think the average individual realizes just how severe this really is.
Brent Jabbour: And now Kevin, obviously Brittain came in and he threw a whole other wrench in the works of ideas here. What do you make of that, Kevin?
Kevin Jackson: [00:14:30] So first of all, the military and the National Guard certainly could be activated to help this. So it would require both the governor and the national government to collaborate on that. You would also have to look at other means of transportation like rail to help reduce the backup at all of the [00:15:00] ports. So those are certainly options that should be explored.
Brent Jabbour: Kevin Jackson, host of digital transformers on supply chain now. And Brittain Ladd, global strategy and supply chain consultant. Thank you both for joining us. Fascinating conversation. We'll do it again soon.
Brittian Ladd: Thank you.
Kevin Jackson: My pleasure. Thank you.
Source : https://www.linkedin.com/pulse/2021-supply-chain-crisis-kevin-l-jackson-cissp-ccsp-2783