Around the globe, supply chains are in constant motion. Even when manufacturing slows and deliveries are delayed, the basic elements of supply are perpetually active. At any given moment, factories are humming, cargo ships are moving, airplanes are taking off, and trucks are on the road.
For business leaders today, especially those in the small and medium enterprise (SME) space, the most critical question is not whether supply chains will continue to move, but where those supply chains are headed in 2022.
Will we see continued disruption in manufacturing and delays in transportation down the road? And how can logistics ecosystems ultimately adapt to the dramatic changes sparked by global e-commerce?
The state of supply chains
After more than a year of pandemic-driven challenges, supply chains are clearly strained. The reasons are complex: early in the COVID-19 era, manufacturing shutdowns were followed by sudden shifts in consumer demand. Then in 2021, flush with savings and hopeful that the pandemic would improve, buyers flocked online, and to stores. Business procurement surged. At the same time, transportation bottlenecks increased, triggered by a mix of elements including a decrease in commercial airline flights (which carry freight as well) and dislocations of cargo ships and containers. Finally, workforce disruptions and labor shortages continue to impact the supply chain from manufacturing to truck transport.
The fact is, however, supply chains were significantly challenged well before the pandemic began. Years of B2B and B2C e-commerce growth, global political instability, trade disputes, natural disasters and infrastructure problems have all contributed to the growing stress.
What’s next for global logistics
With new COVID-19 variants expected and many people around the world still unvaccinated, uncertainty will remain a critical factor in the supply chain equation in 2022. Some pandemic-related challenges, like the current high cost of ocean freight, will likely be resolved, but the potential for disruption due to shutdowns, slowdowns, and labor shortages is high.
The good news is that DHL Express and the air cargo industry are well positioned for the peak holiday season and for the year ahead. We have invested in our people, facilities and fleets, purchasing 22 Boeing 777 freighters over the past three years and converting nine Boeing 767 passenger aircraft to freight configuration – all to boost capacity in our network. In the U.S., DHL Express has invested to expand our workforce and increase wages at our superhub in Cincinnati, and we recently unveiled the grand expansion of our Miami hub.
While DHL’s delivery network, including air cargo and last-mile delivery across 220 countries and territories, is robust, transportation networks in general will face strain in 2022, especially ocean freight. Ports are operating around the clock to off-load container ships, but this effort is only effective when there is efficiency across the entire value chain. That means operating warehouses 24/7, ensuring truckers are available, having the containers and chassis to complete the work, and seeing the backlog further down the supply chain begin to break free. Until each element is fully addressed, problems can persist.
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The long-term view
Technology and advances in logistics are changing the way goods are moved, stored, and tracked. But the full effect of the Internet of Things (IoT), robotics, and Augmented Reality (AR), to name a few, cannot be realized without critical investments in people.
Supply chains are crucial to companies across business sectors, and in today’s hyper-competitive labor market, attracting and retaining the best talent up and down the supply chain has broad implications for local and regional economies around the world. At DHL Express, we continue to create an engaging and rewarding workplace, while equipping our teams with the tools and training they need to excel. We’re so passionate about making the best possible work experience that we were rated the number one best place to work in 2021 by Great Place to Work™ and Fortune Magazine.
Over the next year and beyond, we expect a greater focus on workforce development throughout the e-commerce and logistic industries. From manufacturing to transportation and shipping, the companies that comprise the supply chain must prioritize and seek the best talent, even as they embrace technology and automation.
What are some other keys to the long-term success and strength of supply chains?
Policies, regulations and government investments in supply chain resiliency and infrastructure will be essential. The recently enacted Infrastructure Investment and Jobs Act in the U.S. is an important example. It includes $25 billion for airport modernization and $17 billion for ports, in addition to funding for improvements to highways and bridges. In addition, the U.S. Department of Transportation is also encouraging states that haven’t yet developed a comprehensive freight strategy to do so and update it regularly, with the goal of building resiliency into freight corridors across the country.
There is no doubt that companies around the world will continue to face supply chain challenges in 2022. But by envisioning the future of logistics and committing to its pursuit, businesses and governments can go a long way toward global economic security.
Published: December 2021
Images: DHL; Adobe Stock
CEO, DHL Express Americas
With over three decades of transportation and logistics experience, Mike Parra leads the second largest region within the DHL Express network, the Americas, as CEO. His strategic direction of 56 highly-diverse countries and territories encompassing approximately 27,000 employees has contributed to the organization’s enormous success in growth, quality and employee satisfaction. As a member of the DHL Express Global Management Board, he also has direct oversight for the company’s best-in-class training and development program (Certified International Specialist), as well as its portfolio of global sponsorships. Mike exhibits his passion for social responsibility by building housing for needy families, biking for MS, and being active within his church.