Posted on March 10, 2022 by Hunter Hulbert - Community

Since the supply chain is interconnected, tiny ripples on one end of the supply chain are causing amplified fluctuations at the opposite end. Photo courtesy of Getty Images

If you’re tired of dealing with recent product delays and shortages — and just as tired of hearing, “It’s on the boat!” — you’re not alone. Shipping-related backlogs on everything from computer chips to building materials, standard supermarket items and more have been disrupting the lives and livelihoods of businesses and consumers alike.  

Following, Dr. Amit J. Mokashi , maritime/transportation expert and associate professor at New Jersey City University School of Business in Jersey City , sheds light on the current bottleneck at area ports, the bullwhip effect that’s resulted and when products may flow normally again.  

Dr. Amit J. Mokashi, maritime/transportation expert and associate professor at New Jersey City University School of Business in Jersey City. Photo courtesy of New Jersey City University

Jersey’s Best: For background, what are our key area ports, and what types of products typically flow through them?  

Dr. Mokashi: The key ports in the New Jersey/New York region are the Port of New York and New Jersey (New York-Newark metropolitan area), the Port of Philadelphia, the Port of Baltimore and the Port of Virginia. The Port of New York and New Jersey includes New Jersey terminals in Bayonne, Newark, Elizabeth and Jersey City and New York terminals in Howland Hook (Staten Island), Brooklyn and Red Hook. The Port of New York and New Jersey is the third biggest in the country , and about 80% of the cargo flowing through it is destined for our region. Main imports coming into the port include furniture, machinery, electronics, vehicles, plastics, iron, steel, rubber, paper and food products , while main exports flowing out include vehicles, machinery, plastics, aluminum, wood and paper/food waste . As of 2019, the top five countries importing products through the port by volume were China , India , Italy , Vietnam and Germany .  

JB: Describe the typical flow of products through the supply chain — from the ship to the terminal to the end destination.   

Dr. Mokashi: Ships are a great mode of transportation to move large quantities economically at a relatively modest speed, but they rarely enable door-to-door delivery, so goods have to be moved from one system (ocean/maritime) to another. The port acts as an interphase , or gate , between the ocean (ships) and land-based transportation systems (road/truck, rail and pipelines). Containerized cargo coming into the port is categorized as one of two types — ‘full container load ’ (FCL) or ‘less-than-container load ’ (LCL, which is filled with freight from more than one consignor ). FCL containers coming in on a ship are sent to the container yard (CY), while LCL containers are sent to the container freight station (CFS), where the container is ‘ de-stuffed ’ (emptied ) and the contents segregated as per their consignees/receivers. After clearing customs, the goods are loaded on the selected mode of transport for the next leg of the journey toward their destination (roads/trucks for short distances, rail for longer ones) . With rail, a further last – mile transportation by truck may be needed.  

Shipping-related backlogs have been disrupting the lives and livelihoods of businesses and consumers alike. Photo courtesy of Getty Images

JB: Where are the most pressing bottlenecks currently occurring in the supply chain?    

Dr. Mokashi: Given that the port is essentially a gateway connecting water and land , I see the current supply chain crisis as a systemic failure. The congestion that we see there is most likely the outcome of a problem on either side of this gate — e.g., ‘ bad ’ information on the supply and demand driven by the pandemic that’s throwing our extremely lean and optimized supply chain into disarray. Over the last several decades, a growing emphasis on just-in-time (JiT ) supply reduced inventory held by suppliers to the minimum. While JiT offers economic advantages when things are moving smoothly, the pandemic delivered a double whammy : a sudden drop in demand , which created a crisis for suppliers who had to drop/shut down their production , combined with labor issues (health-related, attrition among truck drivers, etc.) when they tried to ramp up. Some of these suppliers have long-term contracts that limit their ability to increase prices in response to rising costs, while on the demand side, consumers are increasingly buying in excess of their need to avoid running out — all of which put further strain on the supply chain in the form of ships stuck in ports nationwide, lack of chassis, no place to put containers, increased freight rates , etc. These oscillations are known as the bullwhip effect, or  tiny ripples in one end of the supply chain that cause amplified fluctuations at the opposite end. The increasing magnitude turns our initial reaction into a self-fulfilling prophecy , leading to empty shelves and the hoarding of toilet paper .  

JB: What is or can be done to resolve the situation?    

Dr. Mokashi: Among the solutions, there needs to be better communication and cooperation between supply chain partners , including the transparent sharing of information and trend analysis/forecasting and the use of more risk-managed approaches to inventory instead of JiT. There also needs to be greater diversity and flexibility in sourcing. For example, companies should explore new geographic routes with their existing suppliers so that , if there’s a bottleneck in one place, there are alternative routes they can pursue .    

JB: Finally, when do you think the system will be back to normal worldwide?  

Dr. Mokashi: A lot still depends on how the COVID-19 virus will continue and our ability to respond and mitigate its impacts. We are, however, seeing increased resilience in the system. Barring the unforeseen, we should be able to stabilize to a ‘ new ’ normal within a year.     

A longtime  NJ  Advance Media/The Star-Ledger contributor, Susan Bloom is an award-winning New Jersey-based writer who covers topics ranging from health and lifestyle to business, food and more .

This article originally appeared in the Spring 2022 issue of Jersey’s Best. Subscribe here for in-depth access to everything that makes the Garden State great.

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