Walk into any U.S. store these days and you’re likely to see empty shelves.
Shortages of virtually every type of product – from toilet paper and sneakers to pickup trucks and chicken – are showing up across the country. Looking for a book, bicycle, baby crib or 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 had hardly a boot, ski, goggle or pole to speak of – two full months before ski season begins. The owner said he’s normally close to fully stocked around this time of the year.
This may seem a little odd to some Americans given the U.S. has been living with the COVID-19 pandemic for over 19 months. Shouldn’t supply chains stressed by the onset of the pandemic have worked out their kinks by now?
As someone who conducts research and teaches on the topic of global supply chain management, I believe there are four primary – and interrelated – reasons for the continuing crunch. And unfortunately for many, they won’t be resolved by the holidays.
1. Consumer demand soars
When the pandemic first slammed into American shores in March 2020, companies were already preparing for a prolonged recession – and the typical resulting drop in consumer demand.
Retailers and automakers, many of which had to close due to lockdowns, canceled orders from suppliers.
It made sense. By April, the unemployment rate reached 14.8%, its highest level since the Labor Department began collecting this data in 1948. And consumer spending plunged.
But something strange happened by the end of the summer of 2020. After the initial shock, consumer spending began to rebound and was nearing pre-pandemic levels by September, in no small part thanks to the trillions of dollars in aid Congress was showering on the economy and people.
By March 2021, consumers were again spending record amounts of money on everything from new computers and chairs for home offices to bikes and sporting goods as people sought safer ways to get around and entertain themselves. Demand for consumer goods has only climbed since then.
While that’s generally good for businesses and the U.S. economy, the supply chain for most products hasn’t been able to keep up – or even catch up.
2. Missing workers
Even as demand from consumers in the U.S. and elsewhere surges, low vaccination rates at key points in the global supply chain are causing significant production delays.
Less than a third of the global population has been fully vaccinated from COVID-19 – and almost 98% of those people live in wealthier countries.
Low levels of vaccinated workers in important manufacturing hubs such as Vietnam, Malaysia, India and Mexico have caused production delays or reduced capacity.
Vietnam, for example, plays a key role in the apparel and footwear industry, as the second-largest supplier to the U.S. of shoes and clothes following China. Less than 12% of its population is fully vaccinated, and many factories have been shuttered for long periods due to outbreaks and government lockdowns.
Failure to vaccinate more people in developing countries more quickly will likely mean worker shortages will continue to plague supply chains for many months to come.
3. Shipping container shortage
Americans’ insatiable demand for more stuff has another consequence: Empty containers are piling up in the wrong places.
Large steel shipping containers are pivotal to global supply chains. In 2020, the U.S. imported more than US$1 trillion worth of goods from Asian countries. And most of those consumer goods make their way to the U.S. on container ships.
To get a sense of the scale, a single container can hold 400 flat-screen TVs or 2,400 boxes of sneakers.
But many of those containers making their way to the U.S. don’t have a way to get back to Asia. The reasons involve a lack of workers, complicated customs procedures and a host of other problems.
The shortage has driven up the price of containers fourfold over the past year, which in turn is contributing to higher consumer prices.
4. Clogged ports
All these problems are contributing to another challenge: U.S. ports have become extremely backed up with ships waiting to unload their cargo.
A large ship can hold 14,000 to 24,000 containers. That means one ship waiting to make port could hold as much as 5.5 million televisions or 33.6 million sneakers.
Right now, more than 60 container ships are anchored in the ocean off the Ports of Los Angeles and Long Beach, unable to unload their stuff. Ports are also clogged in New York, New Jersey and other locations globally.
Normally, there is no wait for these ships to dock and unload their cargo. But the record demand for imports and shortages of truckers, containers and other equipment has caused substantial delays.
No end in sight
Before COVID-19, global supply chains worked pretty efficiently to move products all around the world. Companies utilized a just-in-time philosophy that minimized waste, inventories and expenses.
The cost of that, of course, is that even small problems like a hurricane or a factory fire can cause disruptions. And the pandemic has caused a meltdown.
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While I don’t expect a resolution to most of these problems until the pandemic ends, a few things could relieve some of the pressure, such as a shift away from consumer spending on goods to services and increased global vaccination rates.
But the difficult reality is American consumers should expect bare shelves, delays and other problems well into 2022.
Kevin Ketels is Lecturer in Global Supply Chain Management at Wayne State University.
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Yaz says
There is only one reason and it’s the incompetency of the Biden administration.
Bill C says
You obviously didn’t read the article, just read the headline, skipped to comments and blamed Biden, just like your hero Trump would do- ignore facts.
Ritter says
What are your “facts”? This should be good
Ray W. says
The facts Bill refers to are in the article.
The issue centers on burden of proof. Yaz posted a claim without listing any evidence to support that claim. Yaz, because he posted the claim, carries the burden of proof, which can be met by introducing competent and reliable evidence to support that claim. If Yaz fails to introduce any competent and reliable evidence, he automatically loses the argument. Bill could be wrong in his reply and Yaz still loses, because Yaz carries the burden of proof. However, since Bill pointed to the article as something that would rebut Yaz’s claim if only Yaz had read the article, something Ritter cannot see, Ritter also loses. Oh, well.
As an aside, the act of filing a claim in court without supporting that claim with competent and reliable evidence is why Trump’s lawyers lost nearly every one of the post-election lawsuits. Trump did win the suit that allowed observers to watch the election officials from a closer distance. Almost every other claim was dismissed without a hearing. Those that made it past dismissal without a hearing were dismissed after a hearing. This explains why the phrase “baseless claim” has taken on new significance in our society.
Ritter says
Don’t worry. The ex mayor of South Bend Indiana is on it! He just reappeared after a two month absence where he took a crash course in how to be a Secretary of Commerce of the United States of America What could go wrong?
Jimbo99 says
Where is all that money coming from for this increased spending, especially with the inflation ? That’s a matter of devalued dollar with eroded purchasing power. I think this has more to do with manufacturers tweaking their “just in time” inventory. Wonder what the turnaround on inventory is for some of these items. Some items only will sell if the substitute goods aren’t available. When the ports are flotillas of cargo ships, this is a matter of downsizing & relocating which ports some corporations operate out of.
Dennis C Rathsam says
God Bless America….In less than a year, Joe Biden has put America in the toilet! What happened to 2.oo dollar gas? Why has my food bill gone up 30.oo dollars? Why is everything going up now? Ships full of goods, that cant be unloaded, the Taliban dressed in our soilders clothes, useing our weapons to kill! This is like a nightmare, how could one person do so much damage, in such little time? Think back to the 80s and Jimmy Carter….. gas lines, unemployement, hostiges in Iran, everything double in price. Its happening all over again. Its obvious to most Americans, we are heading down the wrong path….Bidens approval numbers are as dismal as the press continues to cover up Hunter Biden, and all his indevors! Wheres the justice dept? Why does everyone turn the other cheek on Joe’s problems? Doesnt the truth matter anymore? Democrats haunted the Trump administation, Russian collution for 4 years, spredding lies, that have turned out to be just that LIES!!!!
Ray W. says
Please note the venom of the innumerate partisan. Should anyone create credulity for commenters such as Dennis C. Rathsam? If you think common sense is a process, go through his claims one by one for yourself. If you think common sense is a result, listen to Dennis C. Rathsam.
Ritter says
Does your memory extend back more than a year when Trump was president? When liberal venom was flooding the media. 24-7 for over four years. Liberals can dish but not take. Our country is sinking fast. That’s obvious
Ray W. says
Ritter misses the obvious. There are “venomous partisans” and “innumerate venomous partisans.” Two significantly different things. Dennis C. Rathsam is an innumerate venomous partisan.
The venomous partisans who opposed Trump were both numerate and literate, and right. Commenters on FlaglerLive can be right and wrong at the same time. Ritter, being barely right and significantly wrong, loses the point.
Thank you, Mr. Tristam, for allowing commenters of all persuasions to use this site. I appreciate your work.
Old Guy says
The seeds of this condition were sown many years ago. Long before the current or former President assumed office. As long as our consumer economy remains highly dependent upon products imported from outside our borders we will be vulnerable to these types of disruptions.
mark101 says
“” As long as our consumer economy remains highly dependent upon products imported from outside our borders we will be vulnerable to these types of disruptions.”” well said. This country has the means to produce products right here in the good old USA, BUT ! good old boy politics in Congress and with other countries prevent’s this, along with the laziness of some American people that would rather do nothing and hopefully collect money from others.
tulip says
It cost way more to buy American made products due to much higher wages than manufacturers pay overseas. Therefore the American products would cost much more and people wouldn’t buy as much product as they do now because they couldn’t afford it and would have to learn to live with less, except for the rich of course.
It is very uncomfortable knowing our economy depends on China and others, even our medicines.
Ray W. says
I am not disagreeing with tulip’s comment, just adding to it.
Most older Americans may remember the phrase “peak oil production.” In the late 60’s, an oil industry expert coined the phrase, predicting that America would reach peak oil production in the early to mid-70’s, after which oil production would steadily decline. Oil production did peak during the Nixon administration and it steadily declined for the next 35 years. But the expert could not anticipate technological developments. About 15 years ago, I watched a short interview of the man who patented a new chemical compound that would release significantly more oil from shale rock during an innovative fracking process using horizontal drilling. The chemist had approached American energy companies seeking funds to develop the most efficient compound, but had been turned away. W’s Department of Energy stepped forward with the necessary funding and the rest is history. We can forever debate the ecological impact of that grant, but the issue is tulip’s claim about American-made products.
When the American crude oil boom from the new fracking compound began just before President Obama took office, only one natural gas liquefaction facility existed in the entire United States, in Kenai, Alaska, and it had been shut down for years due to decreased natural gas supplies coming from the Alaskan oil fields. Now, we have seven LNG export facilities, including Kenai. Six of them were permitted during the Obama administration. Cheniere Energy opened the first continental facility at Sabine Pass, LA, betting $30 billion on building that facility and another in Corpus Christi, TX. More liquefaction facilities are in the application or permitting process.
According the the IEA (International Energy Agency), America extracted just over 5 million barrels of crude oil per day during W’s last month in office. That number hit nearly 10 million bpd under Obama and broke 13 million bpd during Trump’s administration. Along with all that additional crude oil, American natural gas production boomed. Without existing facilities to liquefy natural gas for export, we experienced a glut of natural gas supplies, driving natural gas prices down, particularly compared to the rest of the world. This made American manufacturing of energy-dependent items cheaper than even China could make them. While China has significant shale rock oil formations, most are in their deserts and are of a density that makes the fracking, extraction and transportation process more difficult and expensive. Since automobiles and appliances require large amounts of energy during the manufacturing process, the reduced prices for natural gas allowed companies to reopen old appliance factories and build entirely new ones. Now, Whirlpool and GE make a majority of their appliances in the United States. I recall reading an article about GM closing a Canadian automobile factory and shifting production of the Camaro to an American factory, citing “production efficiencies”, meaning that lower energy prices made it cheaper to make Camaros here. As American liquefaction facilities continue to be built to export more and more natural gas, the glut may disappear and natural gas prices will rise. As proof, the recent glut of commercials by FP&L and Duke Energy reflect both companies commitments to combined cycle natural gas electrical production facilities. Duke Power bought the old Crystal River nuclear plant site and tore down four on-site coal-fired electrical generating facilities and built two combined cycle natural gas facilities; it is in the permitting phase to build two more combined cycle plants (a combined cycle plant uses waste heat from either two or three natural gas turbines to heat water to run a steam turbine plant. Mitsubishi’s latest version of the three natural gas turbine-one steam turbine plant converts over 65% of the energy contained in the natural gas to electrical power, besting the most-efficient coal-fired European facility, which is at 44% – most aging American coal-fired plants are in the 30-35% range). Decades of investments in natural gas plants, with their increased efficiencies, are behind FP&L’s claim that it provides energy at a price 30% below the national average. Recent developments in industrial-grade solar panels and more advanced wind turbine designs have driven electrical generating costs below even that obtained by the most efficient combined cycle natural gas turbine plants.
None of us know what the future will bring. Will additional energy innovations and technological breakthroughs bring more manufacturing back to the U.S.? Steel mills require huge amounts of electricity to operate. With enough cheap electricity and cheap natural gas to heat the ore, will lower energy costs allow American steel mills to better compete with China? I hope so.
Mark says
Do you mean while Joe was part of the Senate?
Hyperinflation says
If you retired and think you’ve made enough to get by, you’re in for a very rude awakening over the next few months.
A.j says
Another recession is on the horizon, open your eyes and look people. Homes being built like crazy, who can afford them? We need to save as much as we can, pay off as many bills as we can, dark financial days ahead. Please don’t blame BIDEN or Trump, it is economics, yall know that. Save your money for the houses when the reunion hit. We can buy things at a discounted price. Just telling the truth.
herewegoagain . says
I agree with you .. We (as a country) ain’t seen nothing yet
I’m not Chicken Little – but the US can’t keep running on printing money forever
Grandma always said: Put a little aside for a rainy day
Sadly, I believe those “rainy days” are coming too soon
2008/2009 will seem like a walk in the park IF all the financial indicators are correct
Spray on says
I don’t need no “stinking” toilet paper !!!
I bought a Bidet