FWEA Focus—Ronald R. Cavalieri

FWEA FOCUS Supply Chain Issues Affecting Water and Wastewater

Ronald R. Cavalieri, P.E., BCEE

President, FWEA

Supply chain issues are in the news a lot lately. The United States has been blessed for so long that it is hard to understand the state of our economy and the supply chain issues that we are currently facing. America, the land of plenty, is what we’re used to hearing.

We have seen the empty shelves in the supermarkets and retail stores and experienced delays in ordering materials and equipment. And not just supply chain issues, but also inflation and rising costs that we have not seen for over a generation. How did this happen?

COVID-19 Got it Started

One thing is for certain: COVID-19 helped to bring about the current supply chain issues. In 2020, COVID-19 had a significant impact on the global supply chain. Many companies reduced worker levels to help minimize the spread of the virus. Government shutdowns and ongoing virus-mitigation measures led to continued shortages of workers—not just in the U.S., but worldwide. The global economy remains out of sync with the disruption brought about by COVID-19 as we try to realign the supply chain.

Increased Demand and Rising Costs

Demand has also grown significantly over the past two years, compounding the problem, with reduced worker levels and the resulting increased costs. While consumer demand can increase in a matter of months, it takes more time to increase production, with the need for hiring new employees to meet that demand.

Among the products in tight supply facing utilities is building materials. High material costs and a lack of supply are lengthening lead times of construction projects and pushing contractors to use alternate materials. Overall construction input prices are up 22.3 percent from a year ago, with nonresidential construction prices up 23.2 percent, according to the Association of Builders and Contractors.

Shortages are Making it Difficult to Catch Up

Ports, warehouses, and trucking companies are processing more goods than ever before, while dealing with a series of shortages, including workers, equipment, and space. A national labor shortage has left warehouse companies scrambling for employees and key U.S. ports are working with limited personnel. According to Business Insider, “the turnaround time for a container in the ports (Los Angeles and Long Beach) nearly doubled in 2021 as compared to averages seen in 2017 through 2019. Turnaround time jumped from 3.6 days to 6.4 days—nearly five days longer than several ports in Asia, which operate 24/7.”

Adding to the delays at U.S. ports is a shortage of truck drivers, which has led to further backups.

The Port of Los Angeles is one of the world’s busiest seaports, is a leading gateway for international trade in North America, and has ranked as the number one container port in the U.S. each year since 2000. In 2021, the port handled a total of 10.7 million twenty-foot equivalent units (TEUs), the busiest calendar year on record.

Producer Price Index (source: U.S. Bureau of Labor Statistics)

Impact on Utilities

The global supply chain disruption is causing extremely long lead times and higherthan-normal costs for public and private utilities. The latest American Water Works Association (AWWA) survey finds that 40 percent of water utilities are struggling to hire staff, 72 percent are experiencing supply chain challenges, and 72 percent reported difficulty obtaining pipes or other infrastructure components. Utilities also reported supply chain issues with vehicles (48 percent of respondents), electronic equipment (46 percent), and chemicals (45 percent). Some utilities are struggling to obtain computer chips for their vehicles, and many are seeking innovative approaches to alleviate the supply chain issues and rising costs.

To address the supply chain issues some utilities are using asset management software to help prioritize and schedule daily operational maintenance activities. While there are several actions a utility company can take to protect its supply chain from disruption, an effective approach is to improve its ability to predict demand.