February 2023

Well before the supply chain disruptions fueled by the the pandemic, the trucking industry was in the throes of a severe driver shortfall that hasn't yet abated. But since COVID-19, motor carriers have also been battling a parts shortage, further pushing them behind the proverbial eight-ball. From drive shafts and semiconductors to a number of other essential parts, the component crunch  that's played out over the past several years has exacerbated motor carriers' inability to keep up with the pace of consumer demand.

However, due to waning demand and improvements in the availability of various auto parts, motor carriers and other logistics entities should be able to make some headway in 2023.

According to industry experts, several leading original equipment manufacturers (OEMs) have been able to scale up their production due to growth in semiconductor development, the lifting of social distancing measures in overseas markets and a slowdown in orders.

Jerry Revich, head of U.S. machinery, infrastructure and sustainable tech research at Goldman Sachs, told Transport Dive that for the most part, the worst of the parts backlog is in the rearview mirror. 

"Max headwinds from supply chain risk were really over the course of [2022]," Revich explained. "We're now at a point where we're seeing increasing signs of supply, catching up with demand and in some cases, overtaking demand."

Heavy-duty truck sales in North America are expected to grow from 2022.Heavy-duty truck sales in North America are expected to grow from 2022.

Class 8 truck sales may top 300,000
In 2022, an estimated 283,500 Class 8 trucks were sold in the U.S. and Canada, according to Paccar, one of the world's largest medium- and heavy-duty truck manufacturers. This coming year, retail sales for Class 8s have the potential to exceed 300,000. Class 8 trucks are one of the most common heavy-duty commercial vehicles on the road today and are designed for long-haul transportation needs.

Revich added that the industry is in a much better place today than it was a year ago, particularly with respect to semiconductor output. While there is still room for improvement, the shortage isn't as bad as it used to be.

That said, company leaders at other major manufacturers aren't quite as convinced about their ability to ramp up production and delivery. This includes Magnus Koeck, vice president of strategy, marketing and brand management for Volvo Trucks North America.

"The industry has been facing these challenges for quite a long time now and will continue to have these disturbances to some degree also this year, at least in the beginning of the year," Koeck warned in late 2022, as reported by Transport Dive. "We have robust working relationships with our suppliers and dealer network and are working diligently to maximize production and delivery efficiency."

Differing points of view has been a theme for much of the past year in regard OEM's supply chain. At the annual FTR Transportation Conference, analysts and forecasters had dueling opinions on what Class 8 truck and trailer production would be like in 2023. Some believe that a lot will hinge on whether there's recession on the horizon and how severe it will be.

Since 2020, the year COVID struck, product shortages have been routine. From toilet paper to hand sanitizer to N-95 masks and semiconductors, items that are typically easy to obtain were suddenly hard to come by, a product of elevated demand, panic buying and supply chain disruptions. 

Those goods are largely back in stock and the health of the supply chain may be better, but shortages still persist. What kinds of merchandise may be hard to find in 2023? 

1. Lettuce
The staple ingredient of salads, lettuce wasn't as plentiful in grocers' produce sections in 2022 due to poor weather conditions in California that led to a poor harvest. The Golden State has continued to experience inclement weather into the fall and winter. Ron Scalzo, senior managing director at FTI Consulting, told Supply Chain Dive that this fact will reduce the availability of leafy greens, as well as some other common salad ingredients.

Lettuce farmers had a tough time with production in 2022 due to uncooperative weather conditions.Lettuce farmers had a tough time with production last year due to uncooperative weather conditions.

2. Lithium
Fueled by higher gas prices, electric vehicle (EV) sales have skyrocketed in the past year, reaching over 200,000 in last year's third quarter, according to estimates from vehicle valuation firm Kelley Blue Book. As automakers have scaled up production to keep pace with demand, they've wound up depleting certain raw materials. Chief among them is lithium, a rare earth mineral used in EV batteries. As a result, lithium prices are up appreciably, rising 156% in December compared to 12 months earlier, Supply Chain Dive reported from S&P Global Commodity Insights.

The fact that lithium has to be shipped is also contributing to higher prices. Most of the world's lithium comes from China and Chile, with the South American nation exporting approximately two-thirds of the globe's lithium carbonate, according to Boston Consulting Group.

3. Certain over-the-counter and prescription medicines
Over-the-counter (OTC) medicines are described as such because they're widely available; users don't need a prescription from their primary care physician to buy what they need for treating the common cold, headaches, soreness and other routine ailments. But a surge in seasonal flu, respiratory syncytial and COVID-19 diagnoses has created a supply crunch for these typically easy-to-get pharmaceuticals like ibuprofen and acetaminophen. In December, in fact, drug store chains Walgreens and CVS placed a buying limit for parents buying antipyretics, which are medicines that are designed to treat fevers.

"We're committed to meeting our customers' needs and are working with our suppliers to ensure continued access to these items," a CVS spokesperson told Supply Chain Dive in an email.

Another medicine in limited supply is amoxicillin. Amoxicillin requires a prescription and is used as a first-line defense for treating primarily bacterial-related infections, such as those affecting the urinary tract, skin and ears. In November, the Food and Drug Administration warned about an "acute shortage" of amoxicillin administered orally.

The FDA as a result has urged drug makers to scale up their production of beta-lactam oral suspension products by working with their suppliers.

Building materials, electrical components and other rare earth minerals (e.g. cobalt, graphite) may also be in short supply in 2023.

With more Americans buying rechargeable cars — and several automakers expanding their hybrid and all-electric offerings — the automotive industry is turning to the rare earth metals market. These materials, namely lithium, cobalt, nickel and several others, are critical for manufacturing the lithium-ion batteries electric and hybrid cars need. But with such minerals already being limited in the U.S., there are growing fears that demand may vastly outstrip supply, compromising other industries that rely on such materials.

This is particularly true of graphite. Used as a lubricant for making pencil leads, heat exchangers and as a moderator in nuclear reactors, graphite has a wide variety of industrial applications. But it's also crucial to battery production, serving as an electrode both for batteries as well as fuel cells.

However, as The Wall Street Journal reported (based on Benchmark data), natural graphite is very difficult to come by these days because production hasn't been able to keep pace with demand. Indeed, at the current rate of usage, the U.S. could have a 1.2 million metric ton shortfall of natural graphite by 2030.

Brent Nykoliation, executive vice president of NextSource Materials, told the Journal that this could be a massive predicament for automakers, given how much of a traditional car battery is composed of graphite.

"Graphite always seems to be the forgotten battery material, yet it's in half the battery," Nykoliation said. "It's the largest raw material in the battery."

The typical lithium-ion battery can have up to 10 times as much graphite as it does lithium, another mineral that is needed for the manufacturing process.

Prospective buyers say the environmental benefits of EVs are fueling their interest.Prospective buyers say the environmental benefits of EVs are fueling their interest.

EV sales top 200,000 in third quarter of 2022
While electric vehicles aren't nearly as popular as traditional gas-powered automobiles, sales have intensified substantially over the last year or so — and are expected to pick up the pace as competition increases and prices diminish. Indeed, in the third quarter of 2022, over 200,000 EV were sold nationwide, according to Kelley Blue Book. That's the first time that quarterly EV sales have surpassed 200,000.

They've also gained a following among young people: A majority of 18- to 29-year-old Americans said that they're "somewhat" or "very" likely to buy an EV the next time they're in the market for an automobile, according to polling by the Pew Research Center. And among those who have considered buying an EV, close to 75% said their desire to help the environment was a major reason why.

As demand has grown for graphite, exceeding the pace with which mines can replenish the material, prices have followed suit, with a metric ton of battery-grade natural graphite selling for $812.50, the Journal reported. That's a 25% increase compared to 2020.

Automakers say that they're working with their suppliers to see what can be done to acquire as much graphite as they can and how producers can scale up output. Some are resorting to using synthetic graphite, made from petroleum. However, critics point out that the production processes involved emit massive amounts of carbon into the atmosphere, a primary contributor to greenhouse gas emissions — nullifying the environmental advantages that EVs are supposed to foster.

As any supply chain professional will tell you, managing various day-to-day operations and keeping track of everything going on in the supply chain are among the most difficult parts of the job. These tasks, combined with the increasing levels of complexity and risk that modern supply chains have had to go through, has made tracing exactly what's going on even more difficult than it had been in the past. For these reasons, many high-end supply chain organizations are investing their money into visibility solutions to get a better handle on their supply chains.

Why is visibility so important?

The most critical part of running any supply chain is ensuring you are making the best possible decisions quickly. For any organization to make clear rational choices, a vast quantity of information is needed. This kind of information can only be accessed by specific visibility solutions which can help pinpoint where inefficiencies are occurring in any transport of goods. Some of the key advantages that visibility solutions bring include:

Less risk

According to McKinsey, organizations that have implemented digital dashboards for their supply chain visibility needs were twice as likely to have avoided the supply chain issues that plagued the industry in the early months of 2022. This reduction in risk is due to the fact that organizations with end-to-end supply chains can easily determine where there is likely to be risk, or identify problem areas and work quickly to avoid them.

Higher levels of proactivity

The ideal supply chain should be proactive to risk and change rather than reactive. Having increased visibility means that your organization will be able to see issues from a lot farther off, or better understand the inefficiencies that may have existed in your supply chain for a long time without oversight. At the end of the day, visibility is all about information, and the data that you can gain from investing in a visibility solution can rapidly add value to your efforts for a more proactive and long-term sustainable supply chain.

Reduced costs

Ultimately, visibility boils down into long-term operational efficiency. The ability to make more effective strategies across your supply chain can help reduce costs associated with product sitting in one place too long, inefficient transit routes, or loss due to risk. With greater visibility also comes better reporting on risk, which can be used to help convince your insurers you deserve better rates. A well-implemented visibility solution with organizational backup can help to deliver a strong ROI for any organization involved in mid-to-large scale logistical operations.

Visibility solutions are critical for any organization looking to make a positive impact on its supply chain. Having a clear picture of what is going on across your network at all times, and using that data to create informed plans is invaluable for your business.

There have been rumors of an incoming recession for a while now. With this in mind, there's no time like the present to evaluate whether your supply chain will be able to weather the storm of another set of unfavorable economic conditions. There are plenty of challenges that a recession can bring, and having a set response for each of them could help your organization stay ahead of the competition.

Why this recession may be different

Luckily, this possibly upcoming recession is accompanied by some underlying conditions that change a lot about traditional thinking. According to a Gartner report, there's a big difference this time around, namely that today's supply chains are currently supply-constrained due to global uncertainty and the ongoing effects of the COVID-19 pandemic. This may give your organization the opportunity to finally balance out its supply with its demand and retain a much more even keel than it might be operating on today. The report goes on to say that for organizations to get ready for this possible recession, there are three things that need to happen:

  • Your company needs to identify where its resource bottlenecks are.
  • Your supply chain organization needs to evaluate where it feels it can take risks even in a down-turned market.
  • You must prepare for when the market starts to recover to thrive.

What this means for many companies is that the recession may not be as bad for them as originally thought. The clear message that Gartner is sending should be reiterated and thought about by any supply chain professional. Success comes from taking careful stock of what could happen in the future and managing your risks appropriately. Companies that understand this the best will come out of the recession as if it had never happened, and indeed possibly in a better position than they were before.

There are still steps you can take as a precaution

While the recession may not be bad for your organization, there still is no guarantee. Your company should be taking steps to ensure it isn't blindsided by a sudden change in economic conditions. Here are couple of best practices that you should follow just in case:

  • Keep a close eye on your suppliers: You might be in a good spot for the recession, but it doesn't mean your suppliers are. A supplier might suddenly fold, leaving you in the lurch. By keeping an eye on how they're doing, you'll avoid any unpleasant surprises.
  • Plan ahead: While this is the first rule of supply chain management, taking the time to understand where your organization may fall in terms of a recession will be helpful for your company in the long run.

Whether a recession comes in 2023, having clear knowledge of where your company could be vulnerable and creating plans to mitigate risk represent the best way to ensure your organization doesn't face major trials should the economic worst come to pass.

If you haven't updated your organization's cybersecurity posture yet — it's time to consider it. Supply chains are a valuable asset that malicious actors view as high priority targets as they are a central backbone to any company. Furthermore, large supply chain organizations are viewed by nation state-level cyberwarfare organizations as force multipliers for their attacks, helping them cause chaos on a widespread level. The risk of cyberattack on your organization's supply chain is only going to increase from this point forward as cybercriminals become more advanced and bold in their attacks.

Any company can be affected by cyber threats

While cyberattacks bringing supply chains to a halt isn't a new idea, Maersk and FedEx were famously shut down by the NotPetya attacks that struck the companies' holdings in Europe, as well as other organizations, for billions of dollars' worth of damage. Many business leaders are predicting even more catastrophic attacks to happen worldwide in the wake of the global instability we are facing heading into 2023.

A World Economic Forum report has recently found that 93% of cybersecurity experts and 86% of business leaders believe that an incredibly damaging cyberattack could happen within two years. This is a cause for concern for any organization running its own supply chain, or that of others — as it could cause lost business and general confusion for long periods of time.

As the supply chain space has become more digitized and reliant on technology, it has also ramped up the levels of risk that it faces. Each tool your organization uses can be compromised and could lead to your network facing serious malware, spyware or ransomware issues. Should this happen, your organization could face a loss in delivery speed, an inability to properly ship products or track those shipments and a loss of trust from your customers. Luckily for your business, there are some best practices that can be followed to mitigate the risks that you face.

Making sure your supply chain is more secure

With only 21% of supply chain executives believing that their supply chains are highly resistant to cyber threats, the time to start updating your security protocols is now. In order to get your security posture in line with what it should be, there is one main step that you should consider to ensure your company is adequately protected.

Adopt a cybersecurity framework

The first thing your organization should do is find and adopt a cybersecurity standard recommended by a governing body. A clear example of this would be the NIST framework ,which provides strong controls for organizations as well as reporting practices and requirements for a solid cybersecurity posture. These frameworks are strong tools for any IT professional to have a clear understanding of what they need to do, and how to do it — it's also very helpful that these standards are reasonably strong against cyber threats.

Selling for significantly more than they did as little as a year ago, egg prices have cracked all sort of records. While some have attributed the cost growth solely to the effects of inflation, there are a variety of factors at work, much of it having to do with diminished supply.

1. Avian influenza
Perhaps the biggest contributor to the problem is avian influenza. Otherwise described as bird flu, avian influenza is a highly contagious viral disease that has hit many poultry farms throughout the U.S.  Because avian influenza can be spread from chickens to animals, farmers have been forced to cull their flocks on the off-chance that their birds may be infected. For example, in Nebraska, a leading national producer of eggs, over 6.7 million chickens have been linked to the outbreak, according to federal data obtained by The Wall Street Journal. Colorado, meanwhile, has seen its hen population dip by 90% over the past year. Overall, at least 58 million birds (including turkeys) have died because of avian influenza, whether they were infected or culled as a preventive measure, the Wall Street Journal reported separately.

Maggie Baldwin, a veterinarian in the Centennial State, told the WSJ that the strain has decimated Colorado's poultry population — and there's no end in sight.

"One of the challenges is that we don't know why it has been able to thrive for so long," Baldwin explained. We're almost a full year into this outbreak and it is ongoing."

Egg prices are up everywhere, largely due to diminished production from chickens.Eggs prices are up everywhere, largely due to diminished production from chickens.

2. Food costs
Another contributing factor is inflation, particularly food inflation. Both the United Nations' Food Price Index (FPI) and the Labor Department's Consumer Price Index (CPI) climbed dramatically in 2022. While these respective measures have diminished more recently — down nearly 2% in December for the FPI and 0.1% for the CPI — food costs remain considerably higher than they were a year earlier.

3. Poor chicken feed quality 
Although the evidence is more anecdotal than documented, some poultry farmers have claimed  their hens aren't laying any eggs. Generally speaking, a fully grown hen lays one egg every 24 to 26 hours. But both professional and amateur chicken farmers have taken to social media and said some of their chickens have gone several months without producing a single one.

"My chickens have not laid an egg since July, and nothing's changed," said one man in a TikTok video, as reported by Evie Magazine. He added that he's seen other people on social media attest to encountering the same issue. The man further stated that production resumed after switching to a different feed that he bought from a local producer. 

The primary cause of higher egg prices is bird flu, and it's unclear when that condition will subside. The limited supply of eggs likely won't normalize until chicken flocks are replenished, which could take several more months, depending on how quickly farmers are able to bounce back and the speed with which hens grow. According to the University of Wisconsin-Madison, egg laying hens usually begin to produce eggs by the time they reach 5 to 6 months of age.