As a result of COVID-19, the global supply chain has been left with empty shelves, longer lead times, and higher costs. The pandemic affected all industries, including healthcare, resulting in 67 percent more supply chain disruptions. Many supply chain disruptions have occurred in the last 19 months, affecting raw materials, labor, production, shipping, transportation, storage, distribution, and ‘last-mile’ delivery. Consequently, we continue to face a wide range of global, macro-level concerns that, when piled together, create bottlenecks in an already overburdened system. The first step in addressing these issues is identifying the underlying reasons and understanding the situation.
The demand for products is at an all-time high
Due to the significant increase in demand for goods in the United States, offshore manufacturers have been pressured to produce goods faster. With the return to regular operations following the lockdown, more products in containers are arriving in the United States from Asia than empty containers returning.
As a result, the ports’ shipping and receiving environments are widely unbalanced. Because of this, the United States imports more commodities than can be unloaded and distributed through its supply chain.
The Problem of Port Congestion
Air shipping is typically ten times more expensive than shipping by water, but there is far less room. Consequently, most products imported into the United States arrive in forty-foot equivalent units (FEUs), which are loaded onto cargo ships with 9,000 to 14,000 feet each. A cargo ship docks in the United States in a port that can accommodate boats of that size, such as Los Angeles, Long Beach, Savannah, Charleston, or New York-New Jersey.
In addition to the record level of Asian imports, there are numerous other factors contributing to the persistent congestion in the ports:
Distribution constraints for cargo-handling equipment Aside from chassis (trailers that transport containers), the extra equipment needed to dump containers is small.
A container ship’s size limits where it can berth. Ports and waterways that can accommodate oversized cargo vessels are sometimes challenging to find, limiting the number of ports that can host them. According to international trade data, Los Angeles and Long Beach ports handle 40% of all cargo entering the United States. Increased congestion and delays, resulting in higher expenses and missed deadlines.
In support of container deliveries, there is a shortage of truck drivers and warehousing staff. As a result of the high volume of goods and the labor shortages, goods cannot continuously flow downstream and create backups at facilities along the way.
The holiday shopping season lasts from August to mid-October. During this time, demand exceeds supply, prices rise, and container capacity may become scarce.
Impact on the Healthcare Supply Chain
It is impossible to estimate exact amounts and varieties of healthcare supplies without access to specific shipping data. Healthcare supplies are shipped in containers with commodities for the overall economy.
Manufacturing and distributing medical devices is seen as vital globally. This means these commodities are prioritized to make production and exports to the United States as smooth as possible. Currently, we are experiencing difficulties within our ports. Once containers arrive, they are placed in the same queue as other commodities, no matter their category.
As with container loading and unloading, both are meticulously planned. After determining the target ports, goods are loaded aboard vessels based on weight distribution. Because this is a commodities function, there is no prioritization of what sorts of items are offloaded first. There is no option to pay a premium to deliver particular products over others.
Is there anything we can do?
Due to the dramatic increase in product lead times – the time between placing an order and receiving it – providers should consider purchasing early and reconsider inventory management methods. Lead times for consumer products shipped from Shanghai to Los Angeles and then to Chicago have recently increased from 30-35 days to 80 days or more. To aid in maintaining stable supply levels until port congestion eases in 2022, healthcare systems should support prudent PPE conservation and stockpiling procedures.
Even as COVID-19 exposed supply chain flaws and transformed the healthcare landscape, we continue to show up to address the most significant challenges resulting from the pandemic and drive healthcare innovation for the future.