The supply chain is struggling to find workers and transport goods — how will the global supply chain shortage affect the holidays?
Written by: Abigail Preiszig
The global supply chain is a relay race of manufacturers, ports, trains and trucks that distribute items throughout the world. America heavily relies on offshoring and has benefited from it in the past. Unfortunately, due to several different factors, the global supply chain has taken a large blow, leading to a shortage of everything.
As each country dealt with the pandemic differently, manufacturers went in and out of lockdown, leading to a slowdown in production throughout the world.
American ports in Long Beach and Los Angeles, where 40% of all U.S. cargo ships enter, went from low traffic to an overwhelming stream of goods. This influx of goods is due to manufacturers playing catch-up and shifts in consumer spending within the United States.
Pre-pandemic American spending was 70% travel and leisure. Due to stay-at-home orders and a deadly virus lurking in crowds across the country, spending shifted to home goods. People splurged on home improvement supplies, bicycles, laptops and outdoor furniture.
This phenomenon has led to a 17% increase of incoming ships at the Port of Los Angeles and the deluge shows no signs of slowing down.
The United States supply chain was not built to withstand this influx of goods, and the labor shortage has impacted every step along the way. Therefore, ports take three times longer to unload these cargo ships.
the pandemic needs to end by getting people vaccinated throughout the country and across the world.
Trucks and truck drivers are in highest demand. Even before the cargo increase, the United States has suffered a long-time shortage of truck drivers. America is also in a bind for semiconductor chips used in vehicles and computers, making it difficult to build or fix trucks.
Many factors contribute to the labor shortage. Parents and grandparents had to leave the workforce to home-school children and tend to sick family members, leading to a surge in early retirement. Poor treatment during the pandemic led many to leave the supply chain work force. Workers became sick, or died, from COVID while others were required to quarantine due to exposure, leaving those who continued working burnt out. Restrictions on gathering and a focus on safety forced cancellations of work training classes, thus prolonging the arrival of new workers. Government aid and a surplus of employers have allowed the unemployed to be more choosy with where they work.
Today, cargo ships are waiting for months along the coast for a spot in the port, shipping containers in the port sit waiting to be distributed by truck or train, and shipping containers at warehouses sit waiting to be unpacked.
With so many full shipping containers, and no way to transport empty ones back to manufacturers, the cost of shipping has dramatically increased. According to Freightos, in 2019 the average cost of shipping was $1,318 — it now costs $16,004.
“Fragmented travel rules and restrictions have severely impacted the global supply chain and put at risk the health and well being of our international transport workforce,” states a joint open letter from many executives in the transportation industry.
Published in September 2021 by the International Chamber of Shipping, the letter calls on governments to ensure three things:
Freedom of movement for transport workers
Use of protocols endorsed by international bodies for each sector
Prioritization of vaccinating transportation workers
In their letter they recall crew members being unable to leave their ships for up to 18 months, truck drivers being forced to wait weeks before they could complete their journey and restrictions of flights due to inconsistency in border travel restrictions and vaccine requirements.
The letter also predicts that this ordeal will last well into 2022, and many sources state that the shortage will likely get worse before it gets better.
Shortages produce higher demand for products due to worry of there not being enough. Manufacturers are hesitant to increase production because it will reduce demand.
Misallocation of resources also plays a part in this shortage. For example, one restaurant buys all the peanut butter and another buys all the jelly. Both restaurants need both peanut butter and jelly to make their sandwiches, but they can’t get both products due to the actions of the other.
Both supply and demand complications and misallocation of resources are likely to prolong these shortages.
The supply chain problem has no easy fix, and it will likely take time.
One major player in this shortage is the COVID-19 pandemic — the pandemic needs to end by getting people vaccinated throughout the country and across the world.
Reevaluating supply chain operation and increasing production of essential materials in the United States will benefit the country long-term. President Joe Biden is working on this goal with his Build Back Better plan, which will invest billions of dollars to reshore manufacturing and increase domestic supply chains.
Before anything gets better, prices will likely rise, and wait time will lengthen. Be sure to have what you need on hand, such as water, toilet paper and medications. Avoid panic-buying because doing so will only feed into the cycle.
As for the holidays, stores may not have everything you want or need in stock and online orders may take a lot longer to arrive. It is smart to begin shopping earlier than normal.
If you can’t access everything you or a loved one wants try thinking outside the box:
Shop locally and look for gifts at thrift stores, vintage shops and antique malls.
Get creative! Draw someone a picture, write them a poem or repurpose items you already have.
Stick to digital items such as online magazine subscriptions or streaming services.
Invest in educational endeavors like music lessons or a language tutor.
If they are vaccinated and comfortable with travel, buy an Airbnb or airline gift card.
Treat someone to a concert, musical, movie or comedy show tickets.
Enjoy each other’s company and just don’t get gifts
Celebrate Christmas in July — hopefully this will all be sorted out by then.
Pay for them to get their truck driver license and become a part of the solution.
PSA: Be nice to retail workers this holiday — stores are understaffed and this is not the employees’ fault. Most minimum wage workers are in school, have multiple jobs, do not get paid enough and do not deserve the extra stress of rude customers.