There’s a clock that regulates supply chains, and lately it is losing time, not just by a beat, but hours and days. That throws off sales forecasts and orders, lengthens transit times, and leads to missed deliveries and a pervasive imbalance in assets, people, and goods throughout the economy.
The cost of this loss of time in supply chains is likely huge, and a major factor behind higher transportation prices that have stunned US shippers. The reason the supply chain clock is out of beat isn’t hard to find. The US electronic logging device (ELD) mandate knocked it out of kilter.
As Amazon cut fulfillment cycles from days to hours, the ELD mandate in effect extended delivery times from hours to days. In many cases, shippers found that same-day loads became next-day deliveries as truck drivers ran out of on-duty time or refused loads that cost them a weekly turn.
The result is a further drain on surface transportation capacity already stretched thin by high freight demand and a shortage of qualified drivers that is getting worse as the US unemployment rate drops toward 3 percent. Supply chains need not just truck drivers, tractors, and trailers but more time.
The result of the shortage in capacity and time is evident in recent earnings reports from public companies such as Coca-Cola, Hershey, Hasbro, Deere and Company, Nestlé, and Unilever. “Everybody is seeing an increase in the freight cost,” Unilver CFO Graeme Pitkethly, said on an earnings call.
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