The everything shortage
The big idea
A confluence of forces have brought to light supply chain issues that were there before the pandemic, but are now leading to widespread shortages of goods.
By the digits
10: Companies that control 82% of global shipping
76 seconds: Average time it takes for a crane to load or unload a shipping container in North America
27 seconds: Average time it takes for a crane to load or unload a shipping container in Asia
82: Cranes at the port of Los Angeles
24: Hours per day the port of Los Angeles will now be operating in order to clear the backlog
75%: Restaurants forced to change menu items due to supply chain issues, according to a Sept. 2021 survey
Billion dollar question
What’s causing these shortages?
There’s no one culprit behind so many different shortages, but there are a few general causes:
Changes in demand. As the pandemic disrupted everyday life, people needed more and different things. Even slight deviations in delicate supply chains would find entire industries ill prepared to meet consumer demand.
Manufacturing issues. Supply chains are more global and leaner than ever, leaving less margin for error. Meanwhile, disruptions like storms and lockdowns have stalled out steps in the manufacturing process, creating backlogs.
Shipping constraints. Even though ships are bigger and are carrying more cargo than ever, space is limited. At understaffed ports, workers can’t unpack the stuffed ships fast enough, while ports themselves are difficult to expand to meet the rising demand.
As a result, many different things are in short supply, and it’s hard for anyone to know when the disruption will end.
Charting shipping container prices
It’s not just the stuff we’re shipping that’s in short supply—so are the containers we’re shipping it in. That’s causing their prices to skyrocket.
Three key terms to make you sound smart at dinner parties
Stagflation: A period when sputtering economic growth and joblessness coincide with rising inflation. As the global economy reopens, growth has picked up in the world’s big economies. The worry is that higher prices on everything from a gallon of gasoline to an hour of labor could slow that recovery. Those price increases, in turn, could force central banks to raise borrowing costs at a faster clip to rein in inflation, placing even more drag on GDP expansion at a time when indexes of business confidence in the US and China signal momentum could be flagging.
Bullwhip effect: When small shifts in demand for certain goods ripple up the supply chain, causing bigger and bigger swings in production. Since they can’t predict the future, retailers introduce errors when they scale up their orders in response to expected demand. Wholesale suppliers magnify that error when they adjust their own orders to manufacturers’. Even more error is introduced when manufacturers order raw materials from their suppliers, and so on. The further up the supply chain, the more demand signals become distorted.
Just in time: A manufacturing approach designed to keep costs low by spreading out the supply chain globally and placing orders on an as-needed basis rather than stocking a large inventory. But it presents its own risks—rapid changes in demand or bottlenecks in the supply chain could lead to a shortage or excess of product. And even if supply disruptions were temporary, the impact on prices, demand, production, and capacity could extend years beyond the actual period of disruption.
Person of interest
Takayuki Kobayashi, 46, is Japan’s minister of economic security. He is tasked with making sure the Japanese government, across its ministries, “deal[s] with the economy and security as one,” he said in his first news conference. That means tackling some of the most pressing geopolitical issues of the 21st century, including shoring up supply chains, securing critical infrastructure, protecting technological advantages, and countering economic espionage.
In creating the post, Japan’s prime minister, Fumio Kishida, did not explicitly say the goal is to counter an increasingly aggressive China. But the country inevitably looms large.
- Global trade, rerouted (Quartz). Early in the pandemic, we tracked how the virus was disrupting manufacturing and supply chains for goods such as meat, jeans, and hand sanitizer.
- Why you still can’t get a PS5 (Quartz). Remember when it was just a chip shortage? Yeah, us too.
- Inflation Warning Signs Flash Red, Posing Challenge for Washington (New York Times). A good primer on how inflation and shortages fit together.
- America is running out of everything (The Atlantic). Even as people emerge from the pandemic ready to buy stuff, the pandemic has created so many snarls that there are fewer items available.