The World Economy’s Shortage Problem
Since the start of the pandemic, there obviously have been persistent supply chain issues, many of which can be directly attributed to the pandemic. Covid restrictions and shutdowns in any part of the supply chain process cause ripple effects of delays and missed shipments throughout. However, it is important to understand some of the underlying factors at play that are not directly related to the pandemic.
One key basic economic principle is at play here with high demand for imports from Asia to the U.S. Currently, shipping parcel from Shanghai to L.A. is six times higher than shipping an equivalent parcel from L.A. to Shanghai. Some container owners are sending containers back to Shanghai empty, missing pickups from the U.S. in order to expedite shipments from the east.
On top of demand for good produced in Asia, labor shortages to staff ports, truck drivers, and parcel workers further exacerbate supply chain snarls. When there aren't enough of these workers to match the exceeding demand in shipments, paired with complications caused by Covid, those factors cause ripple effects in the form of delays and shortages throughout the economy.
All in all, nearly every supply chain expert is calling on importers and supply chain managers to anticipate significant delays throughout the rest of the year. We see this in many retail industries as many companies are calling on consumers to buy Christmas gifts now, in hopes of evading supply chain snarls around the holidays.
