by Aubry Heinrich
When the chain on a bicycle breaks, the most effective solution is to replace it. Even though global supply chains seem just as difficult, replacement isn’t an option. As COVID-19 disruptions continue to fade in developed economies, supply chain pressures still affect producers and consumers. The solutions are far from straightforward.
“The current situation is something we have never seen before,” said Toby Tiechelman, PCCA Export Supervisor. “It is a perfect storm, or what some people have called an implosion of the supply chain. If something could go wrong this year, it has. We have been at the mercy of truckers, transload warehouses, drayman, steamship lines, importers, and even the weather.”
Identifying The Broken Links
“The growth of e-commerce and pent-up demand resulting from the COVID-19 pandemic has led to a huge increase in imports,” Tiechelman said. “This resulting increase has led to a slow-down in the U.S. supply chain. The U.S. has cotton to fill the world’s needs, but the factors slowing the supply chain have only allowed a minimal amount of cotton to trickle to the mills timely.”
Many shipping containers sitting in ports, and other locations, are still filled with imported goods. The congestion at the ports creates delays in receiving finished products, making it difficult to export cotton from the U.S., according to PCCA’s Traffic and Invoicing Department. These delays cause empty, available containers to be in high demand – another broken link to repair.
Obtaining shipping containers and chassis is challenging, with a limited supply at each port and insufficient capacity to get them processed. Chassis makers are trying to respond to the increased demand.
“It could take until 2023 before we have enough chassis to handle the surge in import containers congesting U.S. ports and inland rail ramps,” Teichelman said. “Manufacturers are currently building new chassis but are facing major hurdles with labor and material shortages.”
Once the crop is out of the field, producers should still be prepared to adapt to industry-wide difficulties due to the congestion at the ports.
“Longer-term storage at the interior warehouse due to transload warehouse capacity has resulted in higher carrying charges,” Teichelman said. “Some loads may have a month or more of warehouse storage than originally expected. The cost of delivering the cotton to transload warehouses, ports and rail ramps has increased due to truck capacity, fuel costs, and fluid delivery schedules,” he explained. “The lag in the supply chain has caused deliveries to the end-users to be delayed significantly.”
Unfortunately, there is no quick fix for the problems shipping companies and manufacturers face. The effect of these strains is hitting producers’ efforts to market as well as soaring input costs.
How is it Affecting PCCA Grower-Owners’ Daily Operations?
Logistics problems require growers to spend more time planning for supply chain lags that affect their daily operations such as getting parts or buying new equipment.
Equipment breaking down is a significant setback to a farming operation and could be exacerbated by complications in receiving parts. What was once a quick trip to the parts store and back to the field now requires forethought and pre-ordering parts for equipment that has yet to break down.
“Availability and resupply have been the most serious concern for our business,” said Jay Hurst, with Hurst Farm Supply. “Products that we could normally get restocked in a day or two have been pushed out. We have seen up to three to four months to receive parts.”
A good crop year, in combination with higher prices, might incentivize some farmers to order new equipment. But waiting has become the new normal.
“On the whole goods side, we have been told there is no availability for the next 12 months,” Hurst said. “Even the other equipment lines have had tremendous price increases with limited availability. With the large crop last year that increased demand, we have had to get creative to meet our customers’ needs.”
Farming retailers are adjusting their business models to better serve consumers dealing with the inefficiencies.
“We have been using other manufacturers to fill the gap, and where in the past, we would replace something, we have had to move to a repair mindset instead,” Hurst explained. “We have become more creative and resourceful to fill some orders. Instead of only sticking to our normal suppliers, we must broaden our view and think outside of the box.”
Hurst offers a bit of advice for farmers looking to get ahead of the potential setbacks.
“Maintenance is key,” he said. “Order parts you will use based on your history of ordering. You know you will need bearings for the planter and sand-fight- er, so go ahead and order them. I am not suggesting that we panic and buy everything we might need right now, but be ahead of the game. Have a little of what you will need.”
While navigating the business logistics might seem daunting, it is vital for producers to stay informed. It’s the best hope for mitigating the risks of an unstable supply chain.
PCCA’s role in managing supply chain issues is to ensure every bale of cotton makes it to its final destination.
“We know that eventually, all of the cotton will be funneled out of the interior warehouses. We at PCCA work daily to ensure that our grower owners’ cotton is shipped as efficiently and expeditiously as possible,” Teichelman explained. “If plan A does not work, we revert to plan B, C, D, or E.”
While the supply chain is currently a bit rusted, there is no replacing it, only repairing what is broken; one link at a time.