On July 20th, the US Department of State hosted the 2022 Supply Chain Ministerial Forum, with high-level participation from industry, community and political representatives from the European Union, UK, Australia, Canada, Japan, India and Indonesia, amongst others. The forum sought to address the urgent global challenge of strengthening supply chain resilience post-pandemic and in the wake of the Russia-Ukraine conflict and ongoing climate disasters.
The forum was noteworthy in terms of its inclusion of underrepresented voices including the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the US Black Chambers, the National Minority Women Association in Transportation and the United States Hispanic Chamber of Commerce. The inclusion of these groups brought diverse perspectives on how supply chain breakdowns are affecting local communities and families. In his address to the Supply Chain Ministerial, The US Secretary of State Anthony Blinken noted that:
“Supply Chains are vital to tackling virtually every pressing global challenge that we face. To prevent a climate catastrophe and adapt to the growing effects of climate change, we need resilient supply chains to produce clean energy technologies, from wind turbines to batteries. To end the acute phase of the COVID-19 pandemic and ensure that we are better prepared for – to respond to future health emergencies, we need resilient supply chains for vaccines and other critical health supplies.”
With the privilege of chairing the Transportation and Logistics breakout session, I observed the following key issues:
This deep uncertainty is due to suppliers and production facilities intermittently going off-line, the unpredictability of transportation lead times and the availability of transportation equipment including containers, chassis, trucks and container vessels. The 25 discussants also pointed to long container dwell times across global ports including Rotterdam, Busan, Los Angeles and Virginia, whilst inland infrastructure backlogs, particularly in the USA, were highlighted as a primary cause of port delays due to the interconnectivity of global supply chains.
A lack of end-to-end supply chain visibility in terms of inventory, the status level of shipments and the location of goods in transit was another cause for concern because much of the data provided on shipment status and transit is not real-time, so it is not viewed as reliable.
The discussants noted that the transportation and logistics industry is fragmented across modes of transport, ports and geographical locations and that there is a need for deeper collaboration across the industry.
To address these issues, the participants stressed the need for information and system visibility. Data and information sharing across modes of transport and port operators is required to enhance real-time situational awareness and response. Supply chain visibility helps to identify potential longer-term economic opportunities and aids in related investment and policy decisions. Participants noted the need to enhance supply chain visibility through data sharing at a network level, enabling forward and proactive planning on labour, carriers, and hinterland connectivity. To build this network-level solution, participants recommended implementing e-platforms and port community systems. Real-time visibility platforms and neutral port community systems with global standards should be adopted accordingly.
The participants also noted how equity and diversity can improve supply chain efficiency. Improving workforce participation through reaching out to under-represented demographics, along with improving the quality of the job through pay, working conditions and technologies can increase productivity and build durable, long-lasting supply chain resilience. Labour availability, it was noted, could be increased through training, and recruiting as well as the improvement of workplace conditions. Participants noted that it was important to ensure that the voice of the worker is heard in the supply chain. By increasing the participation of small, minority, native, and women-owned businesses, participants felt there could be a deeper range of available producers, transportation providers, and other key players able to participate in the provision of critical goods thereby increasing sources of supply and spreading supply chain risk. They noted how technologies that improved working conditions can also improve productivity, such as the turnaround time of container drop-off and pick-ups – which leads to increased revenue for hauliers.
There was a general consensus that solving critical supply chain issues has always worked best when collaboration and coordination are encouraged among governments, as well as through public and private partnerships. As an example, community leaders can work with private businesses on where to locate supply chain facilities (warehouses/terminals/distribution centres) in their local communities to encourage job opportunities and for freight operations to be a good neighbour.
The primary output of the supply chain ministerial was a joint statement on cooperation on global supply chains that prioritized enhanced transparency, diversification, security and sustainability. Participants committed to promoting transparency in consultation with the private sector, civil society, different levels of government, and other relevant stakeholders to strengthen the resilience of supply chains. These statements of intent are aimed at advancing information sharing, and early warning systems about potential, emerging, and systematic supply challenges. Overall, the aim is to build a community of engaged practitioners and policymakers who will work together on crisis response in an effort to alleviate near-term supply chain disruptions as well as longer-term structural challenges that make supply chains vulnerable to ongoing disruptions.
This supply chain ministerial made clear that the effects of supply chain disruptions are compounding, where a delay in one part of the chain amplifies and creates backlogs across global supply networks. For example, delays in inland transportation and distribution in the US had a ripple effect across global supply networks leading to backlogs at container ports in Rotterdam and Busan. Solutions to these compounding supply chain problems require network-level thinking including enhancing visibility across multimodal nodes and real-time information sharing between network partners. However, creating network-level collaboration and real-time data sharing is a difficult and lengthy task.
Importantly, the ministerial marks a change in thinking towards solving supply problems. The typical approach is to rely on business to develop solutions, who then knock on the door of politicians for assistance and financial support. Instead, the ministerial shows an appetite by policymakers to enhance global cooperation in enhancing supply chain resilience, with a clear buy-in from business. What is unique about the ministerial is how it did not just call on CEOs of large multinationals to comment on the difficulties experienced in global supply chains today. Instead, the ministerial actively sought the voice of workers, underrepresented groups and community actors; the people who experience supply chain problems on a day-to-day basis to develop solutions. Admittedly, the agreements reached in the ministerial are an early step in creating network-level collaboration and there is much work to do to make this vision a reality. However, the ambitions of the ministerial remain admirable and there is a clear desire from participants and policymakers to enhance collaboration and communication across global supply networks.
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