Supply chain bottlenecks squeezing business big and small. One expert explains why it is so hard to iron out global trade kinks affecting the fundamentals.
There really is a red-hot demand going on, Adam Compain, senior vice president at Project 44, a supply chain technology provider, shared Yahoo Finance Live video above. Compain laid out three major reasons why ports are backed up and there's red-hot demand for truckers.
First and foremost is the customer expectation - increase just in one direction — and that's up, explained Compain. Second is capacity constraint. There are limitations on the supply chain network in terms of the quantity of drivers that are available to ship things within the United States and abroad. Things in the supply chain are complex, Compain said. In his view, the process of turning raw materials into a finished good and bringing it across the globe to a consumer's home relied on a whole bunch of interdependencies, and logistics has reached a point that existing software data and tools are really strained. This has cause critical supply chains to increase under the dominance of Compain right now, which has increased delays by 425% year over year.
Container ships have been waiting out of Los Angeles and Long Beach for days, and container fees have correspondingly climbed in line with the HSBC and Oxford Economics chart below As of September 30, 62 container ships are anchored or in drift zones between LA and Long Beach and 28 are berthed, the Marine Exchange of Southern California tweeted.
All of this points to the fact that consumers are likely to face a difficult holiday shopping period.
The total number of ships is close to a record high, with all that backlog accumulating since July, Capital Economics' Paul Ashworth wrote in a note on Oct. 1 referring to the number of ships off the ports of LA and Long Beach. The outshot is that shortages will continue to worsen as we head into the key holiday season. And it's going to get quite challenging, added James.
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