Hello, it’s IINO.
I would like to broadcast IINO san’s Logistics Radio.
Today, I would like to talk about an article from the Wall Street Journal, “North American Supply Chain Disruptions Stalling Production of Drayages.”
Daily Logistics Radio by IINO san in 3rd Nov. 2021
One of the Reason for the Stagnated Container, Shotage of Drayage
One of the reasons for the stagnated container on West Coast of North America is the problem of a shortage of drayage.
Therefore, the demand for the production of drayage is high, and the trend is to increase the production of it. However, materials and parts are not available, and furthermore, there is a shortage of workers in the production plants.
According to one of the drayage manufacturing plants in North America, they are expecting a 25% drop in production this year compared to the pre-Corona period.
Even there is demand, they can’t manufacture it, and the backlog of orders has reached USD2.3 billion as of November 30th.
Priority Supply to Their Top Customers
In addition, due to the rising cost of steel and other materials, the selling price of drayage has jumped by about four times over the third quarter of 2021 compared to August 2020, when it was low.
Although they are in a position to sell at a high price, manufacturers of drayage are hesitant to produce them because of the limited supply, and only give priority to their top customers.
It’s the same for us, we can’t offer space to customers who beat the price down when ocean freight rates were low before Corona, or who chose us only when it was convenient for them.
We give priority to customers who have been with us for a long time and understood us even when problems occur, and we offer limited space to them.
Rise in Price, Shortage of Manpower and Parts
The shortage of drayage manufacturing has delayed the distribution of goods and Christmas products are still staying in the ports.
Other than that, trucking rates for retailers and other shippers have gone up.
In addition, many of the old drayage are out of service due to lack of replacement parts, and there is also a shortage of workers.
Thus, with no parts and not enough workers, manufacturers said it increasingly difficult to meet current demand levels and a trend of the industry expects to continue until 2022.
One of the problems with the current container backlog has been the shortage of drayage.
It is not just a shortage of drayage, but a shortage of parts and materials for due to the disruption of the supply chain, a shortage of manpower, and a lack of replacement parts for old drayage.
I will continue to provide information on this from various angles.