Freight in 2021
A review of the year’s most important events affecting the supply chain and infrastructure resiliency in the US.
In 2021, the freight system and supply chain, usually invisible to most, became dinnertime conversation as package delays became commonplace. Below we examine some of the most important events affecting the US system.
January: Vaccines in motion
The freight system began moving and distributing COVID-19 vaccines in early 2021. In addition to freight companies like UPS and FedEx, US airlines helped fly vaccines around the world. One estimate determined that 15,000 flights might be needed to vaccinate the world. In 2018, there were just over 10,000 total flights in the US.
February: Cold weather
Record-cold temperatures and winter weather in Texas threw the freight system into disarray. In addition to shutting off power for millions of residents, the weather caused a reduction in travel on the region’s icy roads. This led to a 4.5% decline in truckload tonnage from January according to the American Trucking Association. Zach Strickland, writing about the Texas storms, correctly warned that “the current shipping environment remains extremely unstable and more disruptions are likely.”
March: Shopping spree
Assuaged by vaccinations and decreasing COVID-19 cases and armed with fiscal stimulus, Americans drove up retail sales in March 2021. Sales were up nearly 10% between February and March and rose almost 28% year-over-year. This consumer demand added a burden to a freight system that continued to reel from COVID-related disruptions and inadequate inventory levels.
April: Containership traffic jam
In late March and early April, the 1,312-foot Ever Given containership, likely blown by high winds, found itself stuck in the Suez Canal for five days. This caused a traffic jam for hundreds of other ships waiting to cross the key shipping shortcut, which carries more than 10% of the world’s commercial shipments. The ship was freed in early April, but not before creating an additional burden on a supply chain already buckling from COVID-related disruptions, a backlog of orders, and strong consumer demand.
May: Cyberattack
In early May, the 5,500-mile Colonial Pipeline, which carries fuel from the Gulf of Mexico to New Jersey, shut down for six days following a ransomware attack. The shutdown caused shortages at gas stations in the Southeast. In a panic, some Americans began to hoard gas, worsening the shortages. The company resolved the cyberattack after reportedly paying roughly $5 million in ransom to the hackers.
On May 11, the Arkansas Department of Transportation found structural cracks in the I-40 bridge between Memphis, Tennessee, and Arkansas. The discovery prompted authorities to close the bridge, forcing traffic to reroute across the only other nearby bridge spanning the Mississippi River on I-55. This caused significant congestion and delays during the I-40 bridge’s closure. The bridge did not fully reopen until August.
June: Supply chain taskforce
On June 8, reacting to worsening supply chain conditions and port congestion, the Biden administration announced the formation of a Supply Chains Disruption Task Force. The goal of the task force is to address supply chain issues with a coordinated “whole-of-government approach.”
July: More extreme weather
Just five months after winter storms battered the Texas region, wildfires spread across the West Coast. One wildfire in British Columbia, Canada damaged two railways carrying goods to Vancouver and the Pacific Northwest. Disrupted goods included nearly 30,000 daily barrels of oil normally shipped to refineries in Washington state.
A flash flood in Colorado led to a mudslide on July 29 that destroyed portions of I-70 and left some sections of roadway buried under six feet of rubble.
August: Hurricane disruptions
Hurricane Ida made landfall in Louisiana on August 29, leading to extensive flooding and damaged infrastructure along the Gulf Coast. Oil facilities in the area were also forced to shut down, resulting in significant disruption to crude oil production.
September: Truck driver shortage
In what is being dubbed the Great Resignation, a record high of 4.4 million Americans quit their jobs in September. This corresponded to 3% of the seasonally adjusted workforce, also a record. September’s numbers were not an anomaly; the Great Resignation continued. In November, a new record of 4.5 million workers quit their jobs and the quit rate once again hit 3%. Many industries face worker shortages, but the trucking industry in particular is confronted with a serious deficit. The driver shortage totals about 80,000 according to the American Trucking Associations. Given that more than 70% of goods are moved by truck in the US, a truck driver shortage is a major barrier to resolving the supply chain crisis.
October: Oil spill
An oil spill near California’s southern coast released thousands of gallons of crude oil into the ocean in early October. Given the unusual backlog of containerships anchored in the San Pedro Bay waiting to berth at the Port of Los Angeles/Long Beach, many reports suggested that a containership may have been the cause of this spill. In November, federal authorities confirmed these suspicions when they identified a cargo ship whose anchor they believe likely hooked and dragged an undersea pipeline to the point of rupture.
Because of steadily worsening of congestion at US ports, especially those on the West Coast, the Biden administration announced a plan to open the Port of Los Angeles 24/7 with the goal of relieving some container backlogs.
November: Flood damage
British Columbia, which dealt with disruptive wildfires in July, was once again overwhelmed by extreme weather when rain caused extensive flooding, even spreading into Washington state. The floods damaged critical infrastructure, including bridges, roadways, and railways. Access to the Port of Vancouver was also disrupted.
Supply chain challenges have led to surging transportation costs. Truck transportation prices rose over 16% year-over-year in November 2021, as shown in Figure 1. This spike in transportation costs is being passed down from the consumer and helps explain why Americans faced the highest year-over-year inflation since 1982 in November, at 6.8%.
Figure 1: Producer price index for truck freight transportation
December: Powerful tornados
On December 11, a powerful storm produced a group of tornados, which left a 260-mile trail of destruction between Arkansas and Kentucky. In addition to extensive loss of life, the tornados caused profound damage to infrastructure. An Amazon distribution center in Illinois collapsed into a pile of debris, as did a candle factory in Kentucky.
What’s next?
Despite climate disasters, pandemic-related disruptions, and economic uncertainty threatening the freight system and throwing the supply chain into disarray, there is hope that some of these issues will see improvement soon.
President Biden signed the $1.2 trillion “Infrastructure Investment and Jobs Act” into law in November. The legislation adds $550 billion in federal funds over five years to invest in the country’s infrastructure. Included is a $110 billion investment in bridges, highways, and roads, $66 billion for passenger and freight rail, $65 billion for broadband, $39 billion for public transit, $25 billion for airports, $17 billion for ports, and nearly $8 billion for electric vehicles. The funding marks the largest single investment in infrastructure in decades.
We must wait until the next Freight Year in Review to determine if these investments in the nation’s infrastructure improve infrastructure resiliency, reduce supply chain woes, or offer needle-pushing freight innovations.
Josiah Blackwell-Lipkind is a US-based transportation consultant at CPCS, a global infrastructure management consulting firm specializing in transport, power, and public-private partnerships.
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