Just imagine, it’s the Fall of 2021, and the worst seems to be over and American business is back in business. There is still a degree of anxiety about being at work, and people as a whole are still cautious about crowding and tight quarters in any environment; whether it be a department store, an airplane, or a DMV office.
Even after full distribution of the vaccine, businesses are still taking some of the same precautions for their employees and client’s safety. The primary precautions such as distancing, and sanitization remain as basic precautions, and situations with people density means you still need a mask. Events by their very nature that are close encounters require special care; a dentist visit for example, is one of them.
A year and a half after the first infection in the U.S., and we still require a degree of caution, but it is caution without the fear that this will never be over.
The supply chain’s performance during the worst of times is a positive sign of things to come. How about the aviation industry, specifically the part that deals in the carriage of freight by air?
We know the heroic actions by our air freight carriers who manned their cockpits and flew thousands of tons of equipment, medicines and vaccines throughout the United States during the height of the pandemic and in the first legs of the vaccine delivery process. 1
Or the truck drivers and delivery van drivers who completed the transfer by bringing these medicines and vaccines to the end users, both doing so at risk to themselves, and in an entirely professional manner.
And behind the scenes, for those who had to plan and direct these assets are the freight forwarders, shipping agents, consolidators and all other back-office staff responsible for getting freight by any mode, land, sea or air from point A to point B.
There was little good in this pandemic; however, one of the benefits was and still is the steep rise in the learning curve to handle future medical or weather disasters. In short, it was a magnificent chapter in the history of the supply chain and is a good omen for the future transit of critical materials as we enter the final stages of COVID-19 battle.
The Return to Business As Usual
The very broad time frame of returning to our regular work locations is May-June 2021 when by Operation Warp Speed’s estimate, more than 80% of the U.S. population will be vaccinated. According to the Federal Governments CSID, this will happen fractionally, and not in the same time frames, and in the same priorities or site choices location by location. Once inside the state borders, vaccine distribution becomes the job of the state.2
The strategic plan for the first legs of vaccine distribution was developed and carried out by the U.S. Army Logistics Command under the able leadership of General Gustave Perna, a four-star general who served as the chief operating officer of Operation Warp Speed. As chief operating officer, he overaw the logistics for the entire United States as well as having inputs into the sourcing of the vaccine.
Even with the completion of vaccinations, Brandon Fried was especially concerned about retaining the more important rules after the all-clear flag is flown. Knowing the extreme costs and disruption associated with this tragedy, U.S. businesses will need to retain some of the basic policies, procedures and equipment to prevent re-infection.
The Workplace and How Technology Changes Everything
The trends of digitalization and use of drones, autonomous ground transport and robots will not only continue, but will be accelerated by the need to become more efficient. Supply chain workers returning to work may see this change as soon as they enter their office, their warehouse or their fleet HQ.
Technology is the tool that is indispensable in logistics companies because the volume and complexity of import and export traffic makes paper pushing an impossibility.
In a recent online article, How Technology is Changing the Future of Logistics, the case made for technological investment was powerful: “Improved technology has also increased productivity in the supply chain, minimizing costs and errors. These advances benefit all areas of the process; the logistics industry: trucking transportation, international transportation (ocean and air), supply chain management, and shipment tracking.”3
The increase in the role of robotics and artificial intelligence (AI) will not cause any major job dislocation. A comparison could be made of data processing that in the 1960’s and 1970’s many feared would cause job loss but in actually, gave birth to an entirely new set of occupations. The need for efficiency plus the use of AI and auto-robotic equipment will make our workplaces look different, and the work products be created differently, and create an entirely new and more efficient end product.
In any case, you will never see robots sitting in the chairs formerly occupied by freight forwarders. The job is too complex and unpredictable, dependent on human interaction, and requiring a list of external contacts that is large with many of the people and firms in different kinds of companies, with different jobs, and maybe with English as a second language.
Robots are designed for repetition, and sequencing; not for the chaos that is freight forwarding. Individual receiving or shipping events are always unique; never even remotely similar.
The Status of Work at Home Post Pandemic
Many Americans are now working from home as a function of the pandemic. Will the work-at-home status become permanent for most of, or part of, the supply chain?
Working at home is a conversation that has many sub-texts. The complexity of the job, the ability to submit completed tasks from department to department, the need for collaboration when problems can only be resolved by a different set of skills, even the age/experience mix, are all elements to be evaluated and need to be understood before companies decides on who can work full time or part time at home. There is no right answer.
Even staff experience is a measurement. Fried talked about a younger crew who needs the experience level only afforded by older, more experienced employees in air forwarder HQ offices. Leaving a newly minted air forwarder to work at home full time is not the solution. A split week with assurances that prior experience is mixed in with energy, and new solutions is the optimum goal.
The verdict is that post-pandemic, work at home will be significantly reduced. While it will remain to a degree, the mix of at home days and work at the office will skew towards going to work. The ratio will differ from company to company, the primary variables being the products they offer, and what industries they serve.
The other aspect of work at home versus the office is psychological. Working at home is great for a month or so; no commuting, no waking up at 6AM to make downtown New York City by 8:30 AM, and no expensive monthly commuter ticket. But some things are missing and they are very important things, human interaction and the building of team-work.
Will China Retain Its Position As Number One Exporter to the United States?
When we were one of the key sponsors of supporting the entry of China into the WTO in 1980, many believe that the U.S. did not do its homework. For many decades, China skillfully tilted the scales in their favor in the World Trade arena.
Our response was 40 years late and some claimed, very heavy handed. The imposition of tariffs on finished and raw materials from China had an immediate impact to their economy; and China’s loss of their manufacturing as sources for export. These two events began an unemployment trend in China, as well as economic difficulties.
The problem with tariffs is that while it hurt China, it also had an inflationary effect on prices in the United States. Secondly, in industries that require integration of materials from several sources to create finished products, firms that integrate and assemble could not build a finished product. Last but not least, higher import prices have an effect of reducing consumption in which the downstream effect is unemployment.
Brandon Fried is of the opinion that the Biden administration will to a large extent keep the tariffs in force that are now on the books, but examine on a one by one basis, any anomalies in the current trade balance. Even the most partisan Democrat recognizes the imbalance, and does not want to lose any additional manufacturing companies, and the resultant loss of jobs.
The future will see the U.S. gradually moving sourcing to other South East Asia countries and our neighbors to the south; especially Mexico. This will play an important role in how our trade and tax policies will affect sourcing. 4
Any major shift in sourcing has dramatic effects on the supply chain. Geography alone has significant effects on the time and cost of importation. Getting auto parts from Monterrey, Mexico is a much simpler and faster solution than getting them from China’s auto manufacturing centers.
The supply chain will also have to mix and match items from both regions and this will add to the complexity of air forwarders. It’s nice to have a cadre of carriers and shippers who share a region and who can be depended on for the supply, and support the needs for documentation that are such an important part of the trade process.
Will Mexico Be the Next China?
Mexico does not have the manufacturing base of China, nor the wide skill sets in a number of discreet industry sectors. However, it is geographically close, it is increasing its’ ability to be a reliable trade partner, and both the U.S. and Mexico have been open to changes from the old NAFTA that restricted and overly controlled the trade process.
This spirit of cooperation and expansion of sourcing into Mexico will continue. There will also be growth in Asia where Vietnam and Thailand have been seeking to be the new vendor(s) of choice, and pull sourcing from China into their domain. Mexico will end up being the big winner percentage wise in the export rate into the U.S., but China should remain the largest exporter into the near future.
The U.S. and Mexico have been successfully working together to improve both the flow and extent of cross border trade, and also allowing ground carriers into each country to make the “final mile” in the distribution process. There is a more trustful and open relationship between Mexico and the U.S., and this has been strengthened by the new NAFTA treaty named USMCA.
Brandon Fried uses as an example, the greatly improved flow of cross border traffic on both ends of the customs check-points. One of the key improvements is that rail and ground traffic no longer need to change. Improved technology has also increased productivity in the supply chain, minimizing costs and errors. These advances benefit all areas of the logistics industry: trucking transportation, international transportation (ocean and air), supply chain management, and shipment tracking-crews when trucks and trains cross the border.
Industry Ingenuity Prevails
The brilliant idea of using passenger aircraft and doing field transformation into cargo aircraft, saved the day for distribution.
In the Marine Corps we called it “field expediency”. When certain equipment was not available, we would jerry-rig replacement equipment to fulfill the role. For example, during WWII, when PRC-09 radios did not make it to Okinawa when a U.S. transport was sunk, local Okinawan land-lines were utilized by U.S. Marine Navaho Indians who communicated in their native language.
A more sophisticated implementation of field expediency in the COVID-19 vaccination effort was the use of passenger aircraft to serve as a back-up fleet to the dedicated freighters. This was and will continue to be a life saver for the vast amount of vaccines needed by 300 million plus Americans.
The broad strategic plan was to fly the vaccines from the manufacturing plants to a central distribution point, and then from there to fly them to various state centers. The larger 747’s, and Military transport did the first leg of flights, and then they were trans-shipped from the central sites to the state-wide destinations. The smaller converted aircraft were used primarily in the second leg of flights. It also should be mentioned that many volunteer pilots without compensation, flew their own aircraft to supply remote, difficult to reach locations.
In a crisis, the usual way is often not the right way. Extraordinary people have to come up with extraordinary ideas beyond the usual solutions to make things work.
Sources and References:
1 Air Cargo News, “Airforwarders Association: Who’s responsible for distributing the Covid-19 vaccine?”, written by Brandon Fried, www.aircargonews.net
2 U.S. Department of Defense News, “Officials Provide Update on COVID-19 Vaccine Distribution”, written by David Vergun, www.defense.gov
3 “How Technology is Changing the Future of Logistics”, www.shapiro.com
South China Morning Post, “US-China trade war”, www.scmp.com
Alaska Airlines Blog, “The end of an era: Alaska retires unique cargo-passenger ‘combi’ planes”, blog.alaskaair.com