The Current Problem With International Supply Chain

Have you ordered something online and it’s taken weeks to arrive? Or tried to buy something and it’s entirely out of stock? This is a result of the global supply chain shortage that is being seen everywhere. Although there are a variety of factors, I think the most prominent would be the labor shortage and the lack of computer chips. According to CNBC, experts also state that inflation is rapidly increasing as more goods become scarce. 

The “usually invisible pathway of manufacturing, transportation, and logistics” (New York Times) is a mess for companies all over the world trying to get their goods to where they should be. After Covid-related shut downs in almost every industry, suppliers are struggling to keep up with the increase in demand. What happened is during the height of the pandemic, many manufacturing sites all over the world, but mostly in China, South Korea, Taiwan, and Vietnam shutdown due to Covid cases or shutdowns. This caused many shipping companies to cut back their schedules due to the expected decrease in demand. However, many people chose not to save during the pandemic and instead spent while stuck at home. This led to a sudden increase in demand and created a bottleneck for the global supply chain. The U.S.’s consumer price index has increased 6.2% from last year, which is the sharpest rise in 30 years (CNBC). This is far beyond the Federal Reserve’s target. The sudden demand surge led to congestion in the transportation of goods, and many goods piled up in Chinese and Asian warehouses due to a lack of shipping containers. Power shortages in China and Brexit in the United Kingdom have also caused shortages.  

According to the New York Times, before the pandemic it cost $2,000 to ship a container from Shanghai to Los Angeles, and now it’s close to $25,000 (New York Times). The labor shortage and lack of work due to shut downs means there’s not enough people, such as warehouse workers and truck drivers, to unload these goods off the shipping containers and transport them too. Many shipping containers also got stuck in countries that don’t send goods back to China, such as West Africa and South Asia (New York Times). Since most companies require a large amount of components coming from all over the world, one component not being shipped can cause production to halt. This led to higher prices for consumers and slower recovery of the global economy (CNN Business). Some say that the supply chain shortage may be a problem for a while, however others argue that it will be solved relatively quickly. 

It is important that consumers are aware of the supply chain shortage as many begin to shop for gifts. Therefore they should try to order what they need more than two weeks before they are expecting it. They should also be aware of higher than normal shipping fees, which should be factored when ordering items. Also try not to hoard items or purchase things that can wait. 

Picture Credits: https://pairach.com/international-logistics/

Sources:

Egan, Matt. “The global supply chain nightmare is about to get worse.” CNN Business, 13 Oct. 2021. https://www.cnn.com/2021/10/12/business/global-supply-chain-nightmare/index.html

Goodman, Peter S. “How the Supply Chain Broke, and Why It Won’t Be Fixed Anytime Soon.” New York Times, 22 Oct. 2021. https://www.nytimes.com/2021/10/22/business/shortages-supply-chain.html

Smith, Elliot. “Big business bosses warn that supply chain issues and inflation are here to stay.” CNBC, 10 Nov. 2021. https://www.cnbc.com/2021/11/10/big-business-bosses-are-warning-that-supply-chain-issues-and-inflation-are-here-to-stay.html

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