Navigating the New Normal of Supply Chain Challenges

Supply chain friction is here to stay, in one form or another. Recently, congestion has eased at our nation’s seaports, with fewer delays at cargo terminals. But as one set of disruptions have eased, other challenges have emerged to their place.

Labor Issues

In December, HIDA urged Congress to take steps to maintain the freight rail system and avert any rail strike. As Americans weathered a difficult flu season and a surge in pediatric RSV cases, it was no time to disrupt the medical supply chain. The consequences would have been dire, with the potential to impede the delivery of medical products needed to treat patients, protect providers, and save lives. HIDA urged President Biden to take action to avert a rail strike. Fortunately, Congress intervened in a bipartisan fashion and passed legislation to settle the labor dispute and keep the supply chains moving. However, attention will now focus on the current labor negotiations at the West Coast ports.

Fuel Shortages

Although the cost of gasoline has come down from last year’s peak, the price of diesel fuel has remained stubbornly high. This autumn, diesel fuel supplies fell to their lowest level since the U.S. government started keeping records in 1982. Limited refinery capacity and the Russian invasion of Ukraine have contributed to price increases. Separately, a directive from the International Maritime Organization two years ago to require most oceangoing ships to replace their highsulfur bunker fuel with less polluting fuels, which has slowly increased demand for diesel. Energy analysts estimate that the global shipping fleet was now consuming half a million barrels of diesel a day, or roughly 2% of the world’s supplies.

Unpredictable and Fragile Supply Chains

According to research from The Advisory Board, healthcare providers are facing long-term shortages of medical products and greater unpredictability in the supply chain. More than 90% of provider executives report that they are still experiencing product shortages. Every link in the supply chain is potentially fragile. In the last three years, we’ve seen bottlenecks in air freight, shipping, trucking and rail. Distributors have shown great resourcefulness and resolve to overcome the multitude of challenges they have faced.

HIDA continues to work with supply chain experts among our member companies to monitor shipping and transportation trends. We facilitate meetings with port officials and federal agencies to resolve bottlenecks. We know that transportation is a healthcare issue, and continue to focus on long-term solutions to create a “fast pass” system to expedite critical products so patients and providers can get the medical supplies they need.