A monthly summary of important trends affecting supply chain, pricing and the PPE industry.
West Coast Trucker Protests
California’s third-busiest port shut down some of its gates and marine terminals as truckers protested the state’s gig worker law, known as AB5.
The Oakland International Container Terminal (OICT) closed operations for the third day in a row on Wednesday due to independent truckers protesting the law. Protestors are also clogging both the Los Angeles and Long Beach ports. AB5 requires companies that hire independent contractors to reclassify them as employees. The majority of truck drivers in California, an estimated 70,000, are independent contractors. They argue that they do not want to become an employee or part of a union as it would prohibitively drive up insurance and permit costs. A two-year legal stay was recently lifted when the Supreme Court decided not to hear a case which would have protected truckers from the impact of the law.
California ports handle an estimated 40% of container goods that enter the United States. Protests are stressing an already backlogged supply chain, inflating already long lead times and forcing more containers to wait at the ports to be unloaded.
Supply Chain Worker Unrest
The current contract between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) expired on June 30th. West Coast dockworkers have been working without a contract since July 1st. Negotiations between the two parties are taking place in secret with the Biden administration mediating in the hopes of reaching a deal to prevent a strike. The ILWU represents nearly 14,000 port workers in California, Oregon and Washington and handles an estimated 40% of U.S. incoming container volume.
Meanwhile, after years of cutbacks and overwork, freight rail workers are pushing to strike for the first time in over 30 years. In a recent poll, railroad workers voted by 99.5% in favor of striking. The industry’s on-call 24/7 scheduling requirements were exacerbated by the peak volume levels during the pandemic. The Biden administration took action on Friday and prevented 115,000 workers from striking. Biden named a special board to come up with a compromise labor contract. The strike would have brought nearly 30% of the nation’s freight to a screeching halt.
PPE Production Capacity
Production capacity continued to increase this month with China only running 50% of pre-pandemic production volume. Malaysia, in turn, is only running 35-40% of their current production capacity. Excess capacity is due to lower demand. While factory orders have seemingly decreased, supply chain backlogs at the ports means getting product into warehouses stateside is still making stocking levels a concern in some markets.
Air Cargo & The War in Ukraine
Russia’s invasion of Ukraine has added another obstacle for supply chains already challenged by climbing rates and limited transit capacity.
The two countries are home to fleets specializing in extra-large cargo, which are hard to find elsewhere. Commercial flights vanished from the skies of Ukraine and surrounding areas as carriers avoid their airspace. Rerouted flights and climbing fuel costs have resulted in higher surcharges for shippers and additional flight cancellations as some services between Europe and Asia are economically unviable for carriers.
How is Vanguard Safety Working Through these Challenges?
We constantly monitor the ever-changing supply industry to mitigate the impact to our customers by:
- Increasing Safety Stock – We have adjusted our forecasting and planning to carry more safety stock, ensuring we can continue to be a reliable partner for our customers.
- New Distribution Centers – We opened our newest Vanguard Safety warehouse in New Jersey! Located at 45 Saw Mill Pond Road in Edison, NJ, this new DC will increase our stock levels and service our East Coast customers faster. We are also in the process of opening more warehouses on the West Coast to support our growing customer base there.
- Forecasting – We are planning ahead and working off of forecasts provided by our customers to ensure that we are able to consistently supply high quality PPE. We are 100% committed to providing support to our partners.
- Continued Growth – Vanguard Safety is growing fast! We continue to invest in our growing team and hire integrally important people to our roster to better serve our customers, including two new hires Jeff Ingatuk, Director of Business Development and Jeff Buske, National Sales Director – Industrial.