CHAPTER 3

Supply Chain Challenges and Actors

Introduction

This chapter describes and classifies supply chain challenges that have been documented by various stakeholders. These classifications consider how elements of the supply chain may be influenced by factors that vary with the source of the risk or disruption. Chapter 4 references these classifications of challenges with the reported case studies and Chapter 5 provides a synthesis of effective practices and lessons learned for planning mitigation strategies for these challenges.

The interdependencies within a supply chain are crucial factors, and several of the reported challenges result from cascading disruptions of these interdependencies. Additionally, various actors from public and private agencies influence operations. U.S. DOT’s Supply Chain Assessment of the Transportation Industrial Base: Freight and Logistics (2022a), which defined many of these challenges and actors, will be the primary reference used in this chapter.

Classifications of Supply Chain Challenges

This section describes various classifications of challenges and documented lessons learned for supply chain operations. The section focuses on operations during the COVID-19 pandemic, describing the disruptions that occurred, the challenges encountered, and a few of the actions taken in response. However, many of these disruptions described are agnostic to specific events; the descriptions instead identify which elements of the supply chain are more vulnerable to disruption. Some types of disruptive events, like those documented in the case studies in Chapter 4, may cause multiple challenges to the supply chain, some reaching well beyond the initial disruption. These classifications are described in several supply chain models and methods, but the following list most closely aligns with the U.S. DOT Supply Chain Assessment report, (U.S. DOT, 2022a):

• Physical
• Congestion and capacity
• Information and data
• Security
• Equipment
• Workforce
• Regulatory
• Supplier source

The disruptions may have an associated geographic scale (i.e., physical disruption at a global, national, state, or local level). Although otherwise independent of supply chain infrastructure components, many of these disruptions can impact supply chain nodes, transportation networks, and supporting infrastructure.

Physical

This classification includes disruptions to, and lessons learned for, physical systems, such as private and public infrastructure, roads, bridges, airports, inland waterways, and other assets. Disruptions may be event-based (direct damage to infrastructure) or non-event (reduced operational capability due to poor condition of infrastructure).

• Physical infrastructure systems are interconnected and interdependent, creating multiple points of vulnerability and potential for cascading failures. Examples include highway bridge failures that can impede highway and maritime operations, maritime port labor strikes that create bottlenecks for trucking and rail, and weather-related closures that force diversions to other modes of transport (Georgia Tech Research Corporation, Parsons Brinckerhoff, Inc., and A. Strauss-Wieder, Inc., 2012).
• Lack of sufficient resources needed to maintain ground transportation infrastructure (highways and bridges), with a more severe strain often seen with local and rural road systems, estimated that about 10 percent of daily traffic occurs on roads and bridges in poor condition (BTS, 2023b).
• Natural disruptions may cause compounding challenges. For example, low water levels on the Mississippi River have resulted in restrictions on barge transport operations and revealed a need for dredging (BTS, 2023b).
• Natural disasters caused by extreme weather (e.g., hurricanes, floods, droughts) or earthquakes can damage physical infrastructure, which can be especially disruptive to airport operations (BTS, 2023b).

Congestion and Capacity

This classification includes disruptions caused by limited network capacity, resulting in unreliable transport times. Chronic congestion is challenging, but event-based capacity impacts on congested systems (e.g., road closures during rush hour) can cause extreme disruption.

• After the initial decline in imports during the first months of the COVID-19 pandemic in early 2020, the surge of imports that followed strained some maritime port operations that had outdated infrastructure and/or that relied on macro-level regulations and operational procedures for intermodal commodity movements (U.S. DHS, 2022).
• Maritime ports rely on hinterland capacity (rail, truck, and river barge) for effective operation. Bottlenecks from those other transportation modes, such as a lack of trucking capacity, will strain port operations by reducing the port’s available yard storage space [United Nations Conference on Trade and Development (UNCTAD), 2022].
• Temporal properties of capacity must be considered with time-sensitive operations; for example, peak operating times (rush hour) will constrain highway operations for truck drivers that adhere to delivery schedules. Similarly, maritime port operations have scheduled work hours, which affect their capacity for loading and unloading vessels, barges, rail cars, and trucks (BTS, 2023b).
• Capacity is interrelated with physical infrastructure, workforce, and equipment. Capacity issues are macro-level problems that require collaboration between public and private stakeholders to address (U.S. DHS, 2022). For example, highway capacity must correspond with truck drivers’ work schedules, equipment (truck chassis) availability, and supplier operating hours.
• Financial limitations are often a barrier to achieving increases in capacity or efficiency that would improve resilience of the supply chain system (Meyer et al., 2019).

Information and Data

• This classification includes disruptions to communication and data sharing between stakeholders, knowledge gaps, and problems with information detail, accuracy, and trust. These disruptions often occur because of poor data awareness or problems with data accessibility. A lack of data sharing and visibility of KPIs in a system with critical interdependencies posed a significant challenge during the pandemic (U.S. DHS, 2022) and has been a consistent operational challenge since then.
• Many private stakeholders are unwilling or unable to share information or lessons learned about supply chain practices. This often leads to a lack of responsive coordination between the public and private sectors, which impedes rapid and efficient mitigation of disruptions (Meyer et al., 2019).
• The U.S. government maintains good data awareness on personnel, such as truck drivers and dock workers, but has less visibility on the types of goods transported. COVID-19 events encouraged cooperation between government and private sectors, but key elements are still restricted (U.S. DHS, 2022).
• Trust is crucial for data gathering and information sharing, as major disruptions will necessitate competitors to work together to resolve national and global challenges. A lack of trust is viewed as the most detrimental barrier to establishing a resilient supply chain system. (U.S. DHS, 2022)

Security

Disruptions to supply chain security systems often correspond to data or physical disruptions, but in some cases, a security breach may prompt an owner to proactively stop or limit operations until the threat is identified and resolved.

• The COVID-19 pandemic introduced new challenges related to cyber security. Workplace restrictions limited in-person communication and access, necessitating a heavier reliance on technology. Cyberattacks on supply chains tripled in 2021. In May of that year, the flow of gasoline and diesel was disrupted when the Colonial Pipeline company shut down operations in response to a ransomware attack. While new measures were established to mitigate such attacks, these must be balanced against the need for agile response and data sharing (U.S. DHS, 2022).
• Globalization and reliance on international partners can provide economic efficiency but increases the attack surface for malicious actors, creating multiple points of vulnerability in the supply chain (U.S. DHS, 2022).
• A lack of visibility and traceability creates challenges to risk mitigation, especially for lower-tier suppliers at risk of disruption, who may face problems with counterfeit parts or hostility from foreign actors [U.S. Government Accountability Office (GAO), 2020].
• Aging information technology (IT) infrastructure, especially within government agencies, is costly to maintain and makes systems vulnerable to cyberattacks. Many of these systems are obsolete and incompatible with modern cost-effective systems (U.S. GAO, 2020).
• Security relies on trust, including on sharing information and data for risk mitigation, recognizing that while the private sector operates nearly all facilities and systems of the U.S. supply chain, it relies on public infrastructure and policies.
• Risk management covers risks associated with hardware-embedded systems that can be controlled, serviced, and programmed from remote locations, like the ship-to-shore (STS) cranes used at maritime ports. In early 2024 the U.S. Coast Guard and DHS identified the fact that 80 percent of the STS cranes used in the U.S. supply chain operations are manufactured by the People’s Republic of China as a risk factor (U.S. DHS, 2024).

Equipment

Disruptions involving equipment used in supply chain operations, such as freight chassis, containers, or storage equipment, can be caused by a lack of availability, access, or energy (fuel) required to operate the equipment.

• Equipment reaching obsolescence—as happened when the military’s rail flatcar fleet reached the end of its lifespan in the mid-2010s—impacts the availability of infrastructure for transport (Meyer et al., 2019).
• Shortage of equipment, such as skids and pallets at airports and containers at seaports, can cause delays and disruptions in cargo movement (Meyer et al., 2019).
• Reliance on proprietary tools and systems can create compatibility issues between different organizations and lead to operational breakdowns during disruptions (Meyer et al., 2019).
• A lack of storage space and budget resources for equipment replacement can result in cargo buildups and delays (Meyer et al., 2019).

Workforce

Disruptions to the supply chain workforce include any restrictions on or shortages of available personnel needed to operate and maintain transportation systems and the supply chain.

• Supply chain operations require a diverse set of skills to operate equipment, manage operations, and process complex data. The COVID-19 pandemic brought attention to the challenges associated with recruiting and training the requisite workforce, and demonstrated how critical this workforce is (UNCTAD, 2022).
• The pandemic exacerbated labor supply issues occurring across multiple industries, and the resulting workforce conditions (safety protocols, illness, lack of childcare, etc.) led to further worker attrition [Federal Trade Commission (FTC), 2024].
• Anthropogenic hazards, specifically unintentional disruptions caused by operator error or accident, are a challenge, especially when there is a shortage of highly skilled labor within the workforce (UNCTAD, 2022). The 2021 blockage of the Suez Canal, caused by the container ship Ever Given running aground, had a compounding disruptive effect on the global supply chain and was attributed to human error.
• Many supply chain operations, such as maritime ports, rely heavily on cooperation between port authorities, terminal operations, union workers, rail workers, and truckers. Gaining the cooperation needed to develop collective labor agreements can be challenging, depending on the diversity of the stakeholders and their objectives (UNCTAD, 2022).
• The workforce that supports the supply chain relies on proper equipment and regulatory enforcement to ensure safe working conditions. The pandemic increased risks to workers essential to the supply chain, such as truck drivers, product stockers, and customer service staff, because the spread of COVID-19 outpaced the implementation of effective safety measures (FTC, 2024).
• Essential supply chain workers rely on effective commuting systems; disruption-related restrictions and limitations on public transit result in labor accessibility issues.

Regulatory

Disruptions may occur in the system of supply chain regulation, including operational rules, which are controlled by various jurisdictions at the local, state, and federal level. These regulations influence, where, when, and how cargo can be moved, and they affect all modes of transportation.

• Regulations on supply chain operations serve important purposes, but enforcement during emergency conditions (like the COVID-19 pandemic) can impede an already constrained

• supply chain operation, and obtaining waivers from regulations can be a slow process (Meyer et al., 2019).
• The Jones Act (formally the Merchant Marine Act of 1920) limits the transportation of goods between U.S. ports to U.S.-flagged ships. If a port is overwhelmed or closed in an emergency, and U.S. ships are not available, cargo must be moved inland by truck or train (Meyer et al., 2019).
• State-level regulations can affect supply chain operations, as many local ordinances and zoning laws restrict hours of service, truck weight limits, truck routes, and other operations. This can complicate the movement of goods during emergencies, when diverted cargo may rely on atypical transportation routes (Meyer et al., 2019).

Supplier Source

Supply chain disruptions can be caused by overreliance on international supply sources and a limited number of redundant suppliers. Similarly, the movement of commodities may be disrupted when there is a limited choice in the transport route and mode (e.g., rail systems for moving bulk commodities).

• Dependence and overreliance on a single source for critical components or materials can increase vulnerability to disruptions caused by supplier issues, such as production delays or quality problems (Meyer et al., 2019), or by geopolitical events or trade disputes (The White House, 2021).
• Lack of transparency and limited visibility within supplier networks can make it difficult to identify potential risks, such as financial instability or ethical concerns (U.S. DHS, 2024).
• Counterfeiting of parts and materials can introduce defective or substandard parts into the supply chain, leading to safety hazards and performance issues.
• Governments and suppliers or individuals from hostile foreign countries may attempt to infiltrate supply chains to disrupt operations or access sensitive information (U.S. GAO, 2020).

Actors

Actors in supply chain operations can be broadly categorized into public and private sector entities, each with distinct roles and responsibilities. Effective communication and coordination between these actors are essential for a resilient and efficient supply chain.

Public Sector Actors

• Government agencies play a critical role in ensuring supply chain resilience, particularly concerning physical infrastructure. For example, U.S. DOT and FHWA maintain transportation networks and the U.S. Army Corps of Engineers maintains inland waterways. Other agencies, like the Federal Maritime Commission, regulate specific aspects of supply chain operations, such as ocean transportation.
• State DOTs and metropolitan planning organizations (MPOs) are responsible for transportation planning that is otherwise not governed by the federal level. State DOTs and MPOs can be beneficial partners in developing strategies for a more resilient supply chain and often control regulations at the local levels (i.e., arterial, collector, and local street systems).

Private Sector Actors

• Beneficial cargo owners rely on the supply chain to move the goods they own and often influence the routing and mode of transportation used to move cargo.

• Carriers include providers of various transportation modes:
  • – Trucking companies connect disparate parts of the supply chain and are thus responsible for a sizable portion of freight movement.
  • – Rail carriers, often working with ports and trucking companies, play a vital role in long-distance freight transportation.
  • – Ocean carriers facilitate international trade by transporting goods across oceans.
  • – Barge operators utilize inland waterways, like the Mississippi River, to transport large volumes of such commodities as agricultural and fuel products.
  • – Airfreight forwarders manage air cargo transportation, particularly for time-sensitive or high-value goods.

Other Crucial Stakeholders

• Port authorities manage and operate maritime ports, the critical nodes for international trade and intermodal transportation.
• Terminal operators are responsible for efficient cargo handling within ports and terminals.
• Third-party logistics providers offer logistics services like warehousing, transportation management, and distribution, often playing a crucial role in coordinating complex operations.
• Shippers represent entities that contract with carriers for transportation.
• Freight-related associations represent the interests of different freight industry segments and engage in advocacy and policy discussions.
• Labor unions represent workers across the supply chain, including port workers, truck drivers, and railway workers. Their actions can have a significant impact on operations.