U.S. chemical manufacturers report that supply chain problems have gone from bad to worse this year. According to the results of a follow up survey released by the American Chemistry Council (ACC), transportation-related supply chain problems have escalated and have resulted in serious disruptions to manufacturing operations. Last year’s survey found that more than one-third of companies experienced or declared force majeure because of supply chain issues with two-thirds reporting lost production.
In addition to lost manufacturing and increased costs, companies reported this year that unrelenting supply chain issues drove price inflation, resulted in lost customers and hurt employee morale and retention.
The follow-up survey was conducted to see if conditions changed since ACC checked in with its members in the third quarter of last year. The survey covered the 4th quarter of 2021 through the 1st quarter of 2022. Key findings of the survey include:
- 55% of companies report that port and ocean shipping problems are worse this year compared to the third quarter of last year.
- Almost 40% of companies report that rail problems are worse this year compared to the third quarter of last year.
- More than 50% of companies report that trucking problems are worse this year compared to the third quarter of last year.
- 75% of companies have switched some cargo from rail to truck because of rate and service issues.
Companies said that troubles in each mode of transportation negatively impacted other modes. Delays and scarcity of service in one mode put pressure on other modes to fill gaps. For example, with freight rail service problems on the rise, many companies were forced to find alternative shipping methods in an already tight transportation market.
“One of the more troubling findings in the survey was seeing that freight rail problems are spilling over into other modes and making it nearly impossible to get truck service,” says Emily Sanchez, ACC’s director of economics and data analytics. “Railroads are directing customers to find alternative ways to ship their products, which has forced our members to find alternative modes of transportation or curtail production.”
ACC and other industry groups are calling for the adoption of the Ocean Shipping Reform Act, urging Congress to pass legislation to improve truck capacity by increasing the gross vehicle weight (GVW) on the federal interstates and asking the Surface Transportation Board to allow greater access to competitive and reliable freight rail service through reciprocal switching.
For more information, visit: www.americanchemistry.com