Reuters Events: US supply chain woes shift and persist in 2023

Cummins

17/05/2023 19:13

(Adds Cummins and CSX executive comment on supply chain status
and economy in paragraphs 7-10)
    By Lisa Baertlein
       CHICAGO, May 17 (Reuters) - The U.S. supply chain is
healing from early pandemic shocks that sent shipping costs
skyrocketing and squeezed supplies of everything from toilet
paper to pasta, but more than three years later, material
shortages and hiring woes linger.
    Rates for trucking, ocean shipping and other transportation
tumbled after U.S. consumers shifted spending from big-ticket
items like furniture, BBQ grills and big-screen TVs to travel
and other entertainment, offering a reprieve to beleaguered
shippers. 
    However, "there's still a pretty big mess out there," said
Ryan Patel, senior fellow at Claremont Graduate University's
Drucker School of Management. 
    The labor market remains tight, fueling costs. Elsewhere,
machine parts shortages persist and cement has become difficult
to find as automakers and other manufacturers catch up with
demand and the U.S. ramps up infrastructure projects. 
    U.S. supply chains are suffering from a "long-term
hangover," said Dean Croke, principal analyst at DAT Freight and
Analytics, a transportation data provider.
    Speakers from Walmart  WMT.N , Colgate-Palmolive  CL.N ,
Toyota  7203.T  and other companies will discuss their
supply-chain strategies at the Reuters Events supply chain
conference in Chicago on Wednesday and Thursday, as inflation
and interest rate hikes threaten to tip the economy into
recession.
    "Freight costs, logistics, have gone down significantly,"
said Mario Guerendo, who oversees global supply chain for
vehicle engine maker Cummins Inc  CMI.N . 
    Still, Guerendo said, "Where is my stuff? Is still
happening."
    Executives from companies including railroad CSX Corp
 CSX.O  said some U.S. industries are flagging while others
remain robust. 
    "It's a very fragile economy," CSX CEO Joe Hinrichs said,
adding that the retail sector is softening while automotive,
coal, construction and chemicals strong or improving.  
    After spending whatever it took to keep store shelves
stocked during the early days of the pandemic, supply chain
executives now are wringing out costs to shelter profits from
eroding demand, said Alan Amling, distinguished fellow at the
University of Tennessee's Global Supply Chain Institute.
    For example, Target  TGT.N  aims to cut ship-from-store
costs by setting up local consolidation centers that pull
inventory from local stores and pack them on-site, reducing
fulfillment costs and the number of orders that ship in separate
boxes. It also groups deliveries by area to reduce delivery
miles. 
    "We're moving into a new stage, from just trying to keep our
head above water to going back to an efficiency mindset," Amling
said. "That's a really good thing for the supply chain."     

 (Reporting by Lisa Baertlein; Editing by Bill Berkrot and Lisa
Shumaker)
 ((lisa.baertlein@thomsonreuters.com; +1 310-491-7241; Reuters
Messaging: lisa.baertlein.thomsonreuters.com@reuters.net))