How San Francisco’s tech companies are dealing with the global supply chain crisis

In the 1880s, San Francisco’s supply chain was in chaos. “Cargoes could be sold and resold multiple times while the ship was underway,” the San Francisco Maritime Museum records indicate, while the ships had “little or no contact with the outside world during the months at sea.” . Sailors who have signed up for a trip to Ireland could end up in Belgium or Africa.

So the sailors hacked the process. They paid boys to spy on saloons and brothels in San Francisco and report the news of the expeditions. Armed with this information, the sailors would leave the ship in an economy of dockside concerts.

Today, 130 years later, supply chains are chaotic again and shipping data has never been more valuable. Two miles from the port of Mission Rock where entrepreneurial sailors collected data, a tech boom in shipping data is unfolding that could be a silver lining in the dark cloud of the supply chain economy. .

The Bay Area is still waiting for cars, microchips, and holiday decorations, just like everywhere else. But new businesses, new jobs, and new ways of using data are uniquely positioning San Francisco at a time of economic uncertainty.

“If you had to pick one place that has benefited in a unique way during this difficult time, it would be the Bay Area,” Phil Levy, chief economist at supply chain firm Flexport, told The Examiner. “For us, this is a moment of opportunity.”

This is certainly true for Flexport, a 2,000-person supply chain company headquartered in the mid-market that doubled revenue last year to around $ 1.7 billion and hired hundreds of new employees this year. Next week, Flexport is hosting a virtual conference, Forward 21, where experts from Journal of Commerce, Lululemon, Western Digital Corp.

And Flexport is far from the only technology company booming during the crisis. Samsara, a San Francisco company of nearly 1,500, manages fleets and operations with a cloud-based platform. Uber Freight in San Francisco, valued at $ 3.3 billion, pairs truck drivers with freight. Orbital Insight in Palo Alto tracks expeditions with satellite photography and other means. Elementum in San Mateo provides real-time insight into supply chain issues.

The supply chain crisis cannot be solved by innovation alone, says Ted Egan, chief economist of San Francisco, and serious challenges await San Francisco. The technology responds to the challenges, and “it’s good for the people who solve the problem, but not good for the Bay Area as a whole. We always pay more for products.

But Egan agrees that the Bay Area’s response to supply chain difficulties could have lasting value.

On the one hand, companies like Flexport are creating jobs, and many established companies are hiring supply chain experts as a new class of tech jobs emerges. There are over 1,000 supply chain related jobs in the Bay Area posted on LinkedIn, at companies such as Square, Google, Amazon and Apple.

To support all of this software activity, some of the largest hardware in the world is helping the Bay Area tame the supply chain crisis. Four giant cranes added to the Port of Oakland have helped the shipping hub open a fourth new global shipping line this year alone, as it continues to take in traffic that other ports such as Long Beach and Los Angeles do not. can not handle.

This represents an exciting set of opportunities for the Bay Area at a time of economic powerlessness for many cities.

The supply chain crisis is the result of COVID-19, Levy said.

Phil Levy is the chief economist of Flexport. (Courtesy of Flexport)

“Everyone got a little wrong when the pandemic started,” Levy said. “People thought they had the playbook for a deep recession.” Automakers have slashed chip orders, retailers cut inventories, and economists braced for a slowdown that never happened.

“Incomes have increased, as has people’s demand for goods,” Levy said. An economy normally based on 70% services and 30% goods suddenly shifted as the demand for restaurants, travel, concerts and gyms plummeted, but people bought exercise equipment, large televisions. screen and more groceries.

This increase in demand for products happened when COVID-19 shut down first one, then another, then another key component of the global trade economy, Levy said. “There are a lot of links in a supply chain, and in this case, they all fell apart one after the other,” Levy said.

“It happened in waves. The initial shock hit Asia, and it radiated from there, ”he said. When the factories in China closed, the ships did not receive any goods, the trucks sent to meet the ships did not receive their goods, and neither did the consignees. All these plans were scuttled and the system broke down. But the goods arrived later, creating chaos.

When Chinese factories recovered from the first wave of COVID-19 and resumed producing goods, the shipping industry was hit by the virus and was unable to revamp shipping plans to transport the goods. delayed goods. Finally, a huge wave of cargo arrived at ports like Long Beach and Los Angeles, where dockworkers were battling the virus. Shipping containers could not be returned for filling and the entire supply chain struggled to get back on track.

The data can make sense of where the system went down, Levy believes. Flexport’s software and data dashboards helped move $ 10 billion in merchandise to 112 countries last year, according to the company. Its data updates provide insight into the shipping schedule from Asia to North America, and for many other routes to organizations including the World Bank.

Companies like Flexport strive to find where shipments are located and give businesses the information they need to manage and adjust their plans. Levy said data missing from the expedition for centuries can provide insight. “Can you see your things and do you know where they are?” And what do you do with this information? “

Flexport records show that some shipments pass between more than a dozen companies before reaching their final destination, and many of those companies are not communicating. This is how the supply chain broke during COVID-19, but it must not happen again.

“People are really paying attention to this now,” Levy said. “When everything is working fine, you don’t think about it.” Americans have gotten used to ordering products from and getting them, cheap, in a day or two. Now the data can show the many places the system has crashed, but it could take fiscal quarters or even years.

“Freight transportation is a very old industry that isn’t built around data,” Levy said. “It doesn’t lend itself to quick fixes. “

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