Shortages Before The Holidays

The issues affecting supply chains are linked to the COVID-19 pandemic. The pandemic is unique because it has impacted both supply and demand. Some manufacturers still aren't operating at the levels they reached before the pandemic. The pandemic also affected companies focused on logistics, such as warehousing to store items that travel overseas and transportation like trucks and trains to deliver them across the country.

What products are hit hardest? It depends on the industry because of the different supply chains they use, but consumer electronics, such as personal computers and video game consoles, as well as toys, have been affected most by supply chain issues.

Why are cargo ships not docking? The process of unloading these ships requires a lot of work and people, including warehouse workers and drivers to ultimately deliver these products to retailers.“We have increased the number of goods coming here to the U.S., but we do not have more truck drivers, we do not have more warehouse space," said Dai. "So then that’s where those cargo ships are stuck." The most dramatic expression of this snarl is the purgatory of loaded cargo containers stacked on ships bobbing off the coast of Los Angeles and Long Beach. Just as a normal traffic jam consists of too many drivers trying to use too few lanes, the traffic jam at California ports has been exacerbated by extravagant consumer demand slamming into a shortage of trucks, truckers, and port workers. Because ships can’t be unloaded, not enough empty containers are in transit to carry all of the stuff that consumers are trying to buy.

The world is getting a lesson in Econ 101: high demand plus limited supply equals prices spiraling to the moon. Before the pandemic, reserving a container that holds roughly 35,000 books cost $2,500. Now it costs $25,000. No one really knows, but there are good reasons to suspect that this will be with us well into 2022 and maybe longer.

Shortages and delays are likely to affect this year’s Christmas and holiday shopping season by making it much harder to find key goods. A lot of companies ordered earlier, which is exacerbating the shortages, sending more surges of goods toward ports and warehouses.