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Supply chain upheaval threatens peak plans, ‘21 budgets

As the peak pre-holiday shipping season looms over US shippers, businesses are scrambling to secure needed capacity while trying to determine transportation budgets for 2021. That is an increasingly tall order in an uncertain economy and transportation market.g

“In my career, I’ve never seen all facets of the supply chain in upheaval at the same time, until now,” said John Janson, global logistics director for Seattle-based SanMar, an importer and wholesale distributor of custom apparel.

He sees the greatest potential for disruption and higher costs in containerized ocean transportation, especially trans-Pacific lanes. “That part of the supply chain is so long that mistakes you make cost you severely,” Janson said. However, “the challenge is going to quickly shift to small parcel” as the pre-holiday peak retail sales and shipping season get under way more than a month earlier than usual.

Amazon Prime Day, a two-day event starting Oct. 13, is seen as an early start to the online holiday shopping season. Major retailers are expected to follow suit. “This is going to push volume into the small parcel network even sooner than expected,” Janson said.

At SanMar “We’ve been talking ‘peak season’ for weeks,” Janson said. “We’re doing everything we can to ensure we get the service we need. We are absolutely going to be working weekends to ensure we can get shipments into a UPS sortation center on Sunday and avoid the Monday rush.”

The problem Janson sees is there is no back-up network or easy alternative to the parcel network, which he said is already filled to capacity. “You’re squeezing water from one side of the water balloon to another,” he said, and at some pressure point, water balloons break.

COVID-19 vaccination to test supply chain

Janson is also looking past the 2020 peak to potential disruption in 2021. The COVID-19 pandemic has sorely tested international supply chains, but the cure, in the form of an eventual vaccine, will prove disruptive in its own right, and not just for one transportation sector, he said.

“When a vaccine becomes available, it’s going to be a major disruption, especially to the cold chain and air freight industry,” Janson told JOC.com. “There is just not enough capacity to fill the demand if you’re delivering a COVID-19 vaccine to millions of people around the globe.”

FedEx, UPS, and DHL are stepping up cold-chain storage and distribution efforts in preparation, he said. “This has the potential to be the next big disruptor out there. It will spill over to the truckload and expedited carriers, and then to the last mile,” Janson said. “It will create tremendous pressure.”

The best solution in Janson’s eyes is to stay as close to suppliers as possible. This peak season will prove whether the shipper-of-choice concept, which Janson supported long before the term was coined, has true value. “This is really going to test the theory,” he said.

“The people that did not invest in meaningful relationships and did not do the hard work during the good times, those people are really paying out the pocket book right now,” he said. In 2020, “we’ve burned through a ton of relationship capital. We need to keep that focus.”

Jim Snell | SANMAR CORPORATION

22833 SE Black Nugget Road, Suite 130Issaquah, WA  98029

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