There has been a lot of chatter regarding the global supply chain as of late. Whether it’s referencing store shelves being empty, truck driver shortages or national ports being clogged, there has been an increased awareness of disruptions. If we are truly going to solve the issues, we need to understand how we got in this traffic jam to begin with.
Understanding the Traffic Jam
Global supply began over 100 years ago, but didn’t really take off until the late 70’s with the use of the shipping containers and computerization. Data computerization started to streamline logistics and created opportunities with other countries that before weren’t an option. The transformation intensified in the early 2000’s with the explosion of cheap manufacturing in Asia. As an example, if we focus in on feed ingredients to represent the overall supply chain picture, we find prior to 2020 the global supply was a well-oiled machine. Shifting in manufacturing, new animal feed markets and feed rations were ever changing, but there was always balance. About 10 years ago, the shift of production became very one sided to the cheap labor source in Asia, and domestic and European plants began reducing capacities or exiting the market all together. The need to maintain a cheap supply of vitamins and amino acids to the market now came down to securing containers to ship around the world from Asia.
Current Global Supply Chain
The current issues started when ports in China began to shut down due to COVID-19 in early 2020. The supply was there, but there was no way to get the products out of the country. This initiated the domino effect that has repeated over and over this past year. The free trade world economy now came to a pause because there was one large kink in the supply chain right where most manufacturing was occurring. What was “on the water” headed to the U.S. of vitamin and amino acids would buy time to get the issues worked out or so we thought. The normal Asian route for unloading in the U.S. market is on the West coast, but since this was backed up due to our own COVID issues many ships diverted to smaller ports like New Orleans. Unfortunately, hurricane Ida hit at the same time vessels were ready to unload several thousand tons of amino acids. This was the blow to the domestic marketplace that we didn’t need. Since production was reduced in domestic plants, there wasn’t a way to quickly remedy the situation. This caused panic buying and prices to begin to soar. Without enough supply, diet changes and allocations have been implemented across the country. This will remain well into the first half of 2022.
What are we doing about it?
Pipestone Nutrition and procurement groups are working hand-in-hand to think outside the box in terms of ration and ingredient changes. We want to maintain pig health with low-cost ingredient substitutes and stretch the supplies that we do have. This has created new collaborations internally and with new vendors externally. In the long run, problems such as these, make us better prepared and broadens our reach on ingredients for any future disruption. We cannot afford to put all of our eggs in one basket. We, at Pipestone Nutrition, are so thankful for the producers that we work with being flexible and patient during these trying times. Whatever the future holds, one thing is certain. We WILL adjust, become more efficient, optimize, plan and innovate in this global market like never before.
By: Amber Pugh Procurement Director, Pipestone Nutrition