Q&A . . . With Larry Wigger

PUBLISHED JANUARY 2025

Q: Let’s start with the news: can you put the initial threat of a longshoreman’s strike into context for people, and help them understand the importance of that tentative deal becoming finalized?
A: Ports like Los Angeles, Long Beach, and Seattle are critical gateways for U.S. trade, handling about 40 percent of containerized imports. A strike would have disrupted a massive volume of goods, from electronics to apparel, compounding existing supply chain issues. The agreement (though not yet finalized) prevents port closures that could have caused billions in economic losses and significant delays across industries. It demonstrates the importance of collaborative negotiations to maintain supply-chain stability. Without a deal, disruptions would likely cascade into trucking, rail, and warehousing sectors, potentially reigniting consumer goods shortages and driving up inflation.

Q: What can you tell us about the current state of supply-chain affairs, in terms of industries that continue to be most impacted?
A: Supply-chain bottlenecks seen in 2020-2022, such as container shortages and port congestion, have largely eased. Shipping costs have returned to near pre-pandemic levels. However, several industrial sectors face persistent challenges. Auto manufacturing and tech sectors still face semiconductor supply constraints due to geopolitical tensions and limited production capacity. In pharmaceuticals, dependence on foreign manufacturing (especially from China and India) remains a concern for critical drugs. And for raw materials in general, industries reliant on commodities like steel, aluminum, and rare-earth metals continue to face price volatility and sourcing challenges.

Q: Are there other sectors that have seen their chains untangled to pre-pandemic levels of efficiency?
A: Retail and consumer goods inventory levels have stabilized, and just-in-time delivery models are functioning more efficiently again. With apparel and footwear specifically, improved ocean freight flows have significantly reduced lead times. And in eCommerce generally, investments in automation and warehouse networks have helped this sector rebound quickly, though it still depends on workforce availability in key regions. Further dividends from the CHIPS Act and the recently announced (Stargate) U.S. investment of $500 billion in AI infrastructure should eventually show exponential increases in productivity, efficiency, and economic growth.

Q: Do you anticipate that the reshoring movement will continue to add to its momentum, or has a new equilibrium been reached with companies having already made necessary adjustments?
A: I believe the momentum continues. Reshoring is still a priority, driven by incentives in the CHIPS Act and Inflation Reduction Act. Companies are looking to de-risk by diversifying suppliers and building redundancy. Nearshoring trends in countries like Mexico and Canada are benefiting from U.S. companies seeking proximity to avoid reliance on Asia. I don’t think we’re at a new equilibrium yet. While some industries, like electronics, have made significant adjustments, others, like apparel, may remain reliant on overseas manufacturing due to cost constraints. Strategic sourcing efforts to diversify sources and increase redundancy will continue.

Q: Much of the talk about supply-chain issues involves the logistical side, but until the threat of a longshoremen’s strike reared its head, there hasn’t been as much attention paid to the labor side. What’s the condition of the broader work force in logistics and transportation?
A: Driver shortages continue, with the trucking industry still facing a shortage of over 60,000 drivers despite wage increases. High turnover and aging demographics exacerbate the issue. Not only is the workforce aging, but fleet conditions could quickly become an issue. Aging truck fleets and maintenance backlogs are contributing to inefficiencies. Similar labor challenges exist in our warehouse workforce, where high turnover and reliance on temporary labor persist despite automation. In aviation and maritime, pilot shortages in air cargo and labor disputes in maritime sectors are still pinch points (regardless of the ultimate outcome of the longshoreman’s strike).

Q: Just in terms of resource allocation—if one considers a port a resource—where has the traffic and activity shifted in recent years, and does that shift create any challenges or benefits for companies in this region, or Midwest more broadly?
A: We have seen a shift to Gulf and East Coast ports. Many shippers diverted traffic during West Coast disruptions, increasing activity in ports like Savannah and Houston. In the Midwest, companies have benefited from investments in rail and intermodal facilities connecting to these ports, though higher transportation costs can offset gains. That said, there is still an opportunity for regional hubs like Chicago to capitalize on the increased demand for rail and distribution infrastructure.

Q: In policy terms, can the new White House administration do anything to help speed up the recovery?
A: U.S. industrial policy right now should be focused on infrastructure investment, workforce development, and trade agreements. Continued investment in ports, rail, and road infrastructure can reduce bottlenecks and improve efficiency. Policies to attract and train logistics workers, including truck drivers, should be a priority. We need to dial down the political rhetoric on illegal immigration and get serious about recognizing immigrant labor as a critical resource. The U.S. is very fortunate that people want to come here, given the global population declines. And lastly, strengthening trade partnerships to diversify supply chains and reduce reliance on adversarial nations can enhance resilience.

Q: The Mideast (again), Ukraine (again) and China-Taiwan threats (again). Do you anticipate changes in any of those dynamics that can affect supply chains this year, and are there any new global threats emerging?
A: In the Middle East, unrest could disrupt oil supply chains, impacting fuel costs. In Ukraine, the war continues to affect agricultural and energy supply chains. And in the South China Sea, escalation could severely disrupt the electronics and consumer-goods industries. We also face new risks from climate change with increasing weather-related disruptions, such as floods and hurricanes, which are impacting global logistics. Rising cyberattacks on critical supply-chain infrastructure require that we invest in more robust defenses. Businesses must continue investing in supply-chain visibility, sourcing diversification, and workforce development to adapt to an increasingly unpredictable global landscape.