Supply Chain

Race Against Time as Port Strike Threatens Supply Chain Stability

admin — Wed, 08 Jan 2025 16:59:41 +0000

Race Against Time as Port Strike Threatens Supply Chain Stability admin Wed, 01/08/2025 - 11:59

The U.S. East and Gulf Coast ports face a critical deadline on Jan. 15, as a potential coast-wide strike threatens to halt billions in trade, disrupt supply chains, and escalate inflationary pressures. The strike could compound existing challenges for industries still recovering from earlier shocks.

Consumer Impact and Broader Issues
When asked about the impact on consumers, Chris Gaffney, an Edenfield Executive-in-Residence and a professor of the practice in the H. Milton Stewart School of Industrial and Systems Engineering, explains, “Short term, the consumer impact may be more about product availability, as a material portion of fruit and vegetables are imported during the U.S. winter. That said, the large majority of U.S. consumables are domestically produced. Our economy is fundamentally global, and it is in no one’s interest for this conflict to linger for more than a few weeks.” Gaffney is a distinguished expert in supply chain management and logistics with extensive experience analyzing complex supply chain issues.

There are broader challenges beyond the immediate negotiations. While economic issues were addressed in the fall to avert prolonged disruptions, Gaffney identifies a pressing concern: the competitiveness of U.S. ports compared to global leaders. “U.S. carriers and port operators see physical automation as crucial for maintaining supply chain efficiency,” he explains. However, union leaders remain skeptical, citing long-term job security concerns and arguing that automation alone isn’t a definitive solution. They advocate for exploring alternative methods to boost throughput, capacity, and efficiency in U.S. ports.

Economic Implications
If a strike occurs, the immediate effects will be felt most acutely by industries dependent on “just-in-time” inventory models, such as retail, electronics, and automotive. Coastal regions hosting major ports, particularly on the West Coast, will experience the worst disruptions, with consequences rippling across the country. Long-term, these negotiations reveal recurring challenges, as “each coast faces similar cycles during contract renewals.” Gaffney points out that ocean carriers are often seen as the party conceding financially while maintaining a strategy toward increased automation, which remains a contentious but critical element for future competitiveness.

Impact of a New Administration
Gaffney notes that the incoming presidential administration’s support for the longshoremen and its focus on labor relations and supply chain resilience could shape the negotiations. “This shift in priorities means Jan. 20 is not the milestone it might have been,” he explains, adding that the administration may informally intervene before the inauguration to ensure economic stability and prevent prolonged disruptions.

Convenient Timing for Negotiations
Highlighting the strategic timing of the negotiations, Gaffney emphasizes the pressures faced by shippers and port operators during this critical period: “Post-holiday shipping provides a brief window to manage inventories, but the lead-up to Chinese New Year (Jan. 25, 2025) triggers an annual pre-holiday surge as factories ramp up production and ports become congested.” Shippers must act quickly, choosing East or West Coast ports and loading vessels by mid-January to avoid disruptions caused by factory closures and port slowdowns. “This tight timeline demands precise scheduling, leaving little room for error,” Gaffney adds, noting that experienced shippers anticipated these challenges and used the fall pause to plan for accelerated shipments ahead of Chinese New Year.

Proactive Measures by Shippers
Despite the potential for significant disruption, experienced shippers have taken proactive steps to mitigate risks. “Shippers are diversifying port usage, increasing warehouse inventory, and leveraging inland distribution networks,” Gaffney shares. “Some have expedited shipments or rerouted cargo through West Coast and Gulf Coast ports. These measures offer temporary buffers but are not foolproof. Success hinges on timing, available capacity, and adaptability during prolonged disruptions, which could strain resources and add costs across the supply chain.” Ultimately, the resilience of the supply chain will be tested, but careful planning can help in navigating these uncertain times.

Summary sentence

A critical port strike deadline raises concerns over trade disruptions, strained supply chains, and economic impacts during a high-stakes shipping period.

Summary

The U.S. East and Gulf Coast ports face a critical January 15 deadline as a potential coast-wide strike threatens to halt billions in trade, disrupt supply chains, and exacerbate economic challenges. Chris Gaffney, a supply chain expert, highlights the strategic timing of negotiations, coinciding with post-holiday shipping and the pre-Chinese New Year surge. The impending presidential transition adds complexity, with potential government intervention to avoid prolonged disruptions. Industries reliant on just-in-time models, particularly retail and automotive, would be hardest hit, while proactive measures by shippers offer limited relief. The situation underscores long-term challenges, including automation debates and the global competitiveness of U.S. ports.

Dateline

Wed, 01/08/2025 - 12:00

aisles3@gatech.edu

Contact

Ayana Isles
Senior Media Relations Representative
Institute Communications

Associated importer

Keywords

Supply Chain

port strike

dock workers strike

News room topics

Business and Economic Development

Mercury ID

679306

Source updated

Wed, 01/08/2025 - 11:58

A break in the baby formula supply chain

bwaye3 — Tue, 31 May 2022 13:47:02 +0000

A break in the baby formula supply chain bwaye3 Tue, 05/31/2022 - 09:47

A national shortage has parents and families across the country struggling to feed newborns as store shelves have been left bare of baby formula products – including many brands critical to young children with specific vulnerabilities. Retailers are having to ration their supplies, some parents have resorted to shipping in formula from overseas, and social media sites have been used to crowdsource goods to be shipped to parents nervous about where their children’s next meal might come from.

Georgia Tech economics expert Tibor Besedes says it has been a perfect storm of issues to create this stress-inducing situation.

“Like many other industries, the formula producers have faced supply chain issues with respect to ingredients and containers. Waves of Covid-19 infections have affected their workforce and how much formula they can produce,” explained Besedes.

The final straw that may have led to this nationwide shortage: an Abbott production shutdown in February 2022 after several babies were sickened and two died from bacterial infections connected to consuming baby formula from the Sturgis, Michigan facility. A recall followed, and that facility is believed to make at least 20% of all formula bought by consumers nationwide.

“It is one of a few plants in the U.S. producing formula,” said Besedes. “That fact itself is a bottleneck as those few plants operating in the U.S. produce 98% of all formula sold in the U.S.”

“The formula market has been highly concentrated for a long time,” explained Lindsay Rose Bullinger, Georgia Tech assistant professor of public policy. “Now we’re dealing with a crisis and it’s hard to be proactive.”

The overwhelming majority of those formula products are only made by four different companies, explains Wendy White, a nationally known food safety expert.

“Because infant formula is the sole source of nutrition and targeted at such a vulnerable population, it has extra regulations in the Infant Formula Act of 1980,” explains White.

This includes mandatory registration for any infant formula manufacturers and requirements for all formulation, processing details, and ingredient lists to be filed with the FDA.

The regulations are critical, according to Bullinger.

“We’re trying to make a product comparable to breast milk. Newborn children can’t digest many of the proteins in cow’s milk,” she explained.

Formula is developed by scientists in highly regulated environments for infants that are incredibly susceptible to sickness as their immune and digestive systems have just begun adapting to nourishment outside of the womb.

Diluted or homemade options do not provide the right balance of nutrients that infants need at the most critical time of their lives. Manufactured formulas are made in highly sterile environments to avoid harmful additions from getting into these mixtures.

“It’s incredibly hard to get that right in a home environment without introducing bacteria,” Bullinger said.

Those strict regulations also mean that possible scenarios to help alleviate this formula shortage have been complicated. Just shipping some in from another country? Not so fast.

“Foreign manufacturers need to obtain FDA approvals to begin exporting to the U.S. to make up the shortage,” said Besedes. “The FDA is now looking at manufacturers based in countries with similar regulations to expedite their approvals and increase shipments to the U.S.”

The first relief came from overseas within the past week – a shipment of about 70,000 pounds of formula. More foreign shipments are expected in the coming days, but the supply may only last for about a week as issues continue to compound.

“Once there was a recall and parents heard, they started stockpiling formula,” said White. The result is taking already short supplies and stretching them even thinner.

“The supply chain has to also deal with the unneeded bullwhip effect due to shortage gaming and hoarding behavior, making the situation even worse than what it should be,” says Operations Management Associate Professor Morvarid Rahmani.

White also says that 50% of the infant formula in America is purchased through government subsidies.

States who provide this assistance often sign exclusive contracts with one of these four formula manufacturers. Abbott carries the contract in nearly two-thirds of U.S. states – complicating the purchases for families with infants in those locations.

“Families in communities that are economically disenfranchised may be disproportionately affected,” explained Bullinger. “But even if you have the money, if you cannot buy formula how else are you supposed to feed an infant.”

Families who rely on Supplemental Nutrition Assistance Program (SNAP, also commonly known as food stamps) or Supplemental Nutrition for Women, Infants, and Children (WIC) may not be able to choose which brand of formula they can receive. They can only get the formula their state has a contract with. If it is out, they may just be out of luck.

Some of the most hard-to-find infant formulas are the specialized products developed for newborns with milk allergies or other digestive issues. There’s a special emphasis on sourcing those products for parents in need.

So how much longer could this shortage impact American consumers? At least a few weeks, Georgia Tech’s experts say.

“Abbott is estimating that it’ll take about two weeks to get production to resume but another 6-8 weeks to get formula back on supermarket shelves,” says White.

That means the closed facility should be open in late May with production back up to full speed sometime in August. Limited diversity in the market has left parents in a bind.

“A shortage could be alleviated by increasing output of other plants and manufacturers, which is being done, but it is difficult to replace an entire plant,” explained Besedes.

“Ramping up production has been difficult because of shortages in labor and ingredients as well as production scheduling challenges,” explained Rahmani.

Some desperate parents have had to resort to extreme measures. But pediatricians have said infants should only be fed formula or breast milk. Anything else is likely deficient. Using alternative feeding methods could lead to long-term problems.

“There is a risk that a shortage will mean babies will not be getting the nutrition they need to develop. That could lead to a range of health problems affecting their physical growth and brain development,” explained Senior Research Engineer Maureen Linden from Georgia Tech’s Center for Inclusive Design and Innovation.

“Consumers should listen to their pediatricians and other experts and follow their advice. Pediatricians may have available samples they can give out,” said Besedes.

They can also offer advice for alternative baby formula (to the one in shortage) which is available. Medical experts are strongly advising against diluting formula or trying to recreate it at home which could cause long-lasting damage.

“We may see a rise in the rate of developmental disabilities in the age group that is presently reliant on formula – those presently six months or less,” says Linden.

Nutrition is the most important thing in an infant’s life. It’s the number one priority – making sure we are feeding them and they are developing,” explained Bullinger.

That’s why infants often get so many checkups – to make sure they are growing and gaining weight. Proper nutrition is critical for that to happen.

In the meantime, consumers can take their own action. White says it’s worth trying to buy online or shopping around at different stores.

The federal government has relaxed regulations for SNAP and WIC recipients to be able to get products with increased flexibility.

The White House has also invoked the Defense Production Act which is aimed to help manufacturers ramp up output quickly.

“Those companies will have first dibs at materials and ingredients that are needed to make formula,” said Bullinger.

“This shortage should be temporary, as demand settles, and supply is replenished from the reopened Abbott plant and FDA-approved imports,” says White.

Regardless, Georgia Tech experts have said we should have seen this coming and could have been better prepared and quicker to act – particularly for the sake of the youngest among us.

“The FDA, Biden’s administration, and baby formula manufacturers have been slow in taking actions during the past few months to prevent that. This crisis could have been prevented by timely actions,” said Rahmani.

“Infants always get the short end of the stick. They can’t speak for themselves,” said Bullinger.

Experts in this story:

Tibor Besedes

Wendy White

Lindsay Rose Bullinger

Maureen Linden

Morvarid Rahmani, associate professor, Operations Management Scheller College of Business

Summary sentence

Georgia Tech experts explain how we got here and how long this shortage could last

Summary

Georgia Tech experts explain how we got here and how long this shortage could last.

Dateline

Fri, 05/27/2022 - 12:00

snorris@gatech.edu

Contact

Steven Norris
Director, Media Relations and Social Media
Georgia Tech Institute Communications

Location

Atlanta, GA

Associated importer

Keywords

baby formula

experts

shortage

Supply Chain

Expert

News

update

formula

infants

children

production

manufacturing

plant

Sturgis

abbott

similiac

enfamil

newborns

nutritiiono

WIC

SNAP

Georgia

atlanta

News room topics

Business and Economic Development

Health and Medicine

Core research areas

Manufacturing, Trade, and Logistics

Mercury ID

658564

Source updated

Fri, 05/27/2022 - 13:29