The Supply Chain Crisis, Explained


Photo: APU GOMES / AFP via Getty Images

You may have heard that right now, people are having a lot of trouble buying things. Maybe you’ve run into it, or someone you know has, or maybe you’re worried about experiencing it in the next few weeks, when your expanding network of family and friends will expect you. buy things for them. This barrier to purchase is officially known as the Supply Chain Crisis, although to be honest it’s a pretty useless name, as it doesn’t help me personally understand what’s going on.

If you feel the same way, fear not. I’ve scoured the murky waters of economic jargon and sales babble in an attempt to figure out what’s going on here.

This crisis has a lot of moving parts, which is why experts like to compare it to things like dominoes, Jenga, or music chairNS. Here’s what really happened. At the beginning of the pandemic, a lot of manufacturing plants closed or production slowed down mainly because of the coronavirus outbreak. With workers sick and forced to close, these factories aren’t delivering much, so shipping companies are slashing their schedules dramatically, assuming there won’t be a need to get things out anytime soon. all over the world.

Turns out they were wrong. All of us, loyal consumers, want to summon as many objects as possible into our locks, overloading the supply factories with demand. We want to start with sourdough and we want it now! Factories tried to ramp up production, but suddenly couldn’t get raw materials because so much had to be produced too quickly. Everything else has to stop as well: Loading, unloading, and transporting finished products are done by essential workers, whose safety depends on staggered shifts, reduced capacity and double duty. when completely shutdown.

Can you guess what led to the shortage? I can’t, so I’ll tell you. It’s container shipping. All those full containers that are in ports and docks are supposed to be emptied and taken to their next destination, where they will be filled with new cargo and sent elsewhere. Instead, they just sit there with no one to unpack them. This is where things really explode, because basically nothing can go anywhere. Raw materials to the factory, finished products to retailers, direct to consumers – shipping costs skyrocket because everything that needs to be shipped is busy with something else in some other ports that don’t have enough workers to unload them all.

Because the world never really stops shopping for things, the problem just keeps getting worse. And here we are, facing the busiest shopping season of the year, when what we really need is for people to buy as little as possible to help take the pressure off.

Of course, this crisis involves many factors, and the consensus seems to be that basically everything that has happened in the past two years and beyond has led us here. Here’s a fun game to play with the family during the holidays: name a theme and see if you can trace the supply chain crisis back to it. Climate change? Yes, extreme weather causes disruptions in supply chains, and we’re getting more and more of that. Minimum wage? Absolutely true: Low wages and poor working conditions are largely responsible for the massive labor shortage. Social media? Of course! Where do you think we get the urge to buy everything in front of us?

Here are some other, more specific entities that you can identify errors with, if you choose:

  • Peloton enthusiasts: In the depths of the impasse, demand for some very specific products in rich nations has skyrocketed: home exercise equipment, baking tools, game consoles, workbenches. The already stressed shipping industry became completely exhausted, and the ingredients needed to make some of these specific products began to run out. Hopefully the factories will be able to catch up when things return to normal, of course, this never really happened. So yes, the sourdough bakers are responsible, and so is your aunt, who can’t stop talking about how hot Alex Toussaint is.
  • Covid Hoarders: These people! You know those. Maybe you are one. Remember when people panicked buying toilet paper in bulk on Amazon? Dark period. The first wave of panic buying, which hit different parts of the world at different times, was what initially put pressure on the global shipping industry.
  • That big boat: Remember Already given? The big, sweet boat stuck itself in the Suez Canal, bringing 12% of the world’s trade to a standstill for six days in a row? Sorry about this boat, but she is also partly to blame for the situation. Because the world’s shipping is inherently precarious, anything that deviates a little from it can have a massive ripple effect, meaning our good girl helped move the supply chain. go deeper into a vortex.

She has a good-natured shoulder. First of all, although the experts initially said this could work out well in 2023, we seem to have turn a corner throughout the ordeal, with shipping rates dwindling and a bit of progress being made at working ports in unloading. Major retailers say they’re fully stocked for the holiday season, which means mass gift shopping won’t put new strain on production and shipping.

During the measurement, Experts I’m saying that the earlier you order gifts, the better your chances of getting them in time for the holidays. Electronics is a particularly risky bet, as massive microchip shortages are now affecting everything from cars and TVs to phones and tablets. Retailer is prioritizing stockpiling small, flexible, and soft products for the holidays this year, as these are the easiest to pack into shipping containers (again: the ones we don’t have enough of). Headphones, stuffed animals, blankets, slippers, batteries, ponchos, baby clothes – anything that doesn’t take up too much space to transport is the best way to relieve the pressure and also find something. something will come sooner rather than later.

Another option is to shop in a store instead of ordering it online – that way you’ve got your product on hand instead of relying on a dubious arrival date. Even better? Gift cards or monthly subscription boxes are not subject to timely delivery.

That said, the less you can buy, the easier it will be for every link in the chain to catch up. Even without a supply chain crisis, this is not a bad time to try buy less in general – mass consumption, from production to transport, is a huge contributor to our carbon footprint. Plus less giveaways in circulation means you’ll (hopefully) receive fewer unwanted treats this holiday season. Pasta of the month for all!

PS: Chances are, we still have a broken supply chain next year, now is a great time to start the Year-round Gifts section of your phone Notes app.

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