Guest comment: Why empty shelves, long waits persist in the United States | Columns
Walk into any US store these days and you’ll likely see empty shelves.
Shortages of virtually every type of commodity – from toilet paper and sneakers to vans and chicken – are occurring across the country. Looking for a book, a bicycle, a cot or a boat? You may have to wait weeks or months longer than usual to get your hands on it.
I recently visited my local ski shop and they barely had a boot, ski, mask or pole – two full months before the ski season started. The owner said it was normally almost fully stocked at this time of year.
This may seem a bit strange to some Americans given that the United States has been living with the COVID-19 pandemic for over 19 months. Supply chains stressed by the onset of the pandemic have they already solved their problems?
As someone who researches and teaches on the subject of global supply chain management, I believe there are four main – and interrelated – reasons for the continuing crisis. And unfortunately for many, they won’t be resolved until the holidays.
1. Consumer demand is skyrocketing
When the pandemic first hit U.S. shores in March 2020, businesses were already bracing for a prolonged recession – and the typical drop in consumer demand that resulted from it.
Retailers and automakers, many of whom have had to shut down due to lockdowns, have canceled supplier orders.
It made sense. In April, the unemployment rate hit 14.8%, its highest level since the Labor Department began collecting data in 1948. And consumer spending plunged.
But something strange happened in late summer 2020. After the initial shock, consumer spending started to rebound and was approaching pre-pandemic levels in September, thanks in large part to the thousands. billions of dollars in aid that Congress rained down on the economy and people.
In March 2021, consumers were spending record sums again on everything from new computers and home office chairs to bicycles and sporting goods, as people searched for safer ways to get around and play. The demand for consumer goods has only increased since then.
While this is generally good for businesses and the US economy, the supply chain for most products has not been able to keep up or even catch up.
2. Missing workers
Even as consumer demand in the United States and elsewhere grows, low vaccination rates at key points in the global supply chain are causing significant production delays.
Less than a third of the world’s population has been fully vaccinated against COVID-19 – and nearly 98% of those people live in wealthier countries.
Low levels of workers vaccinated in major manufacturing centers such as Vietnam, Malaysia, India and Mexico have resulted in production delays or reduced capacity.
Vietnam, for example, plays a key role in the clothing and footwear industry, as the United States’ second-largest supplier of footwear and garments after China. Less than 12% of its population is fully vaccinated, and many factories have been closed for long periods due to epidemics and government lockdowns.
Failure to immunize more people in developing countries faster will likely mean that labor shortages will continue to weigh on supply chains for many months to come.
3. Shortage of shipping containers
Another consequence of Americans’ insatiable demand for more is that empty containers are piling up in the wrong places.
Large steel shipping containers are essential to global supply chains. In 2020, the United States imported more than $ 1 trillion in goods from Asian countries. And most of these consumer goods arrive in the United States on container ships.
To get a feel for the scale, a single container can hold 400 flat screen TVs or 2,400 boxes of sneakers.
But many of those containers heading to the United States have no way of getting back to Asia. The reasons are a lack of manpower, complicated customs procedures and a host of other problems.
The shortage has quadrupled the price of containers over the past year, which in turn is pushing consumer prices up.
4. Clogged ports
All of these issues contribute to another challenge: US ports have become extremely blocked with ships waiting to unload their cargo.
A large ship can hold 14,000 to 24,000 containers. This means that a ship awaiting boarding could hold up to 5.5 million televisions or 33.6 million sneakers.
At present, more than 60 container ships are anchored in the ocean off the ports of Los Angeles and Long Beach, unable to unload their belongings. Ports are also blocked in New York, New Jersey and other places around the world.
Normally, there is no waiting for these ships to dock and unload their cargo. But record demand for imports and shortages of truckers, containers and other equipment have caused significant delays.
NO END IN SIGHT
Before COVID-19, global supply chains functioned efficiently enough to move products all over the world. Companies used a just-in-time philosophy that minimized waste, inventory and expense.
The cost of this, of course, is that even small issues like a hurricane or factory fire can cause disruption. And the pandemic caused a collapse.
While I don’t expect most of these issues to be resolved until the pandemic is over, there are a few things that could ease some of the pressure, like a shift from consumer spending on goods to services and a rate hike. global immunization programs.
But the harsh reality is that American consumers should expect bare shelves, delays and other issues until 2022.
This guest comment is republished from The Conversation under a Creative Commons license. Read the original guest commentary on https://tinyurl.com/4f2rxcxm.