Over the last three decades, companies have established wide-ranging global supply chains that have taken advantage of steadily improving scale economies in global logistics. Efficient and reliable ocean and air cargo have linked low-cost manufacturing hubs across Asia with major markets in the United States and Europe. Much of this global sourcing was driven by the cost savings reaped through labor arbitrage, cost savings that were so dramatic that it more than covered the expense associated with moving products across vast distances to markets, or the extra cost of carrying inventory in long pipelines.
It’s Time to Rethink Your Global Logistics
The pandemic has overloaded companies’ usual shipping networks.
March 12, 2021
HBR Staff
Summary.
The initial supply and demand shocks caused by the pandemic were followed by an import surge as suppliers tried to replenish inventories, which threw normal transportation operations into turmoil. In the United States, this has included a lack of freight-handling capacity at Los Angeles and Long Beach ports, overloaded U.S. intermodal rail networks, and a lack of containers. But alternatives to established logistics networks exist. It’s time for companies to take advantage of them.