Supply chain crunch offers opportunity for Seattle

Unless you search on purpose, the modern global supply chain is usually invisible. A complex system of materials, manufacture and transport that can also be magical. Wave a magic wand – or press the one-click order button – and the world is on your doorstep, sometimes overnight.

The pandemic has messed up that system, resulting in a glitch that manifests itself in a variety of ways, including empty shelves in the grocery store, school team uniforms that don’t ship until after the off-season, and even new cars that are idling required components are missing in the factory.

The supply chain is now as visible as the dozen container ships that were anchored in Puget Sound last week, waiting at the terminal site to unload their cargo, or the stacks of shipping containers – some loaded with goods – lounging in the ports of Tacoma Stack and Seattle.

With the holiday season around the corner, things are expected to get worse before they get better. However, these short-term challenges can lead to long-term opportunities for the region.

A cascading effect
The spread of COVID-19 initially brought fear of an economic downturn. While the demand for services pounded as people settled down, the demand for online goods exploded as people increasingly ordered.

Every link in the supply chain is struggling with this demand, causing delays and consumer price increases.

Containers, the backbone of international trade as they are shipped around the world, are scarce in Asia, which has led to massive price increases. Before COVID, renting a container from China to the west coast cost less than $ 2,000. Today it can cost as much as $ 20,000 per container, said Jonathan Song, senior vice president of global sales and marketing for Seattle-based logistics company Expeditors.

Bottlenecks also exist along the entire supply chain, with traffic jams in ports giving way to overcrowded railways and overcrowded warehouses, compounded by the long-standing shortage of trucks and drivers.

“I’d be tempted to say it’s a perfect storm, but I think it’s more than that,” said Debra Glassman, an economics professor at the University of Washington. “It’s this cascading effect of a system that is designed with multiple points of failure.”

Build resilience
Supply chain experts always plan for disruptions, but these are usually natural disasters like hurricanes or geopolitical tensions surrounding trade. The widespread system stress test presented by the pandemic surprised everyone. This has not only led to adapting to what is happening now, experts said, but also to rethinking what the supply chain will look like in the future.

“The last 18 months have been nothing more than basically rewriting a new playbook on the subject of logistics,” said Adam Drouhard, Managing Director of Cargo at Alaska Airlines.

The goal of minimizing costs by moving materials before they are needed for manufacturing and maintaining minimal inventory has proven unsustainable during the pandemic. And the wisdom of concentrating the manufacture of certain products in one region is also called into question.

In looking for ways to make the supply chain more resilient, the Puget Sound division has opportunities for growth. The region’s ocean freight operator already supports more than 58,000 jobs and $ 12.4 billion in economic activity in Washington state.

The Northwest Seaport Alliance, which includes the ports of Seattle and Tacoma, continues to see record volumes this year and is working with terminal operators and the International Longshore Workers Union to improve efficiency

Overloads in California and Canadian ports have the less congested port of seattle to acquire more business. The opening of the remodeled Terminal 5 in January, which can accommodate the largest container ships, will help clear some of the local backlog, officials said.

This capacity building takes time and indicates the importance of supporting necessary private and public sector investments.

It’s also important to elect candidates for the Port of Seattle Commission – as well as for the Seattle City Council – who recognize the port’s value, protect its industrial areas, and avoid unnecessary politicization, such as keeping an Israeli shipping company from holding its cargo after activists called for a boycott. The editorial team is researching and interviewing candidates and will publish recommendations shortly.

The supply chain challenges will persist well into 2022, experts say, but competent management of the ports and support from the region’s leaders will enable them to emerge from this crisis and improve the region’s competitiveness.

The Seattle Times editorial staff
Members are the editor of the editorial page Kate Riley, Frank A. Blethen, Luis Carrasco, Alex Fryer, Jennifer Hemmingsen, Mark Higgins, Derrick Nunnally and William K. Blethen (retired).