Looking for solutions to the global supply chain crisis

PHOENIX – It’s holiday season, but not everyone is happy and cheerful. That’s because this year Christmas shoppers are paying higher prices and seeing a few more empty shelves due to a “global supply chain crisis” – a phrase that has become all too familiar in dinner conversations.

And as Americans continue to face empty shelves and soaring prices towards the end of 2021, experts are looking for causes and possible solutions.

COVID-19 was the catalyst for this widespread series of supply shortages, but these restrictions have impacted almost every sector of the economy – from shipping and trucking to manufacturing and storage.

Most importantly, it’s an issue that affects everyday consumers like Becky Andrews, a Phoenix Central Buyer.

“Overall, prices have increased,” she says. “I came to get (an item) and it was $ 3 more than before and I just didn’t get it. I think that will affect a lot of families. “

The underlying problems

Two of America’s largest seaports, the Port of Los Angeles and the adjacent Port of Long Beach, are experiencing shipping delays, but that’s not the only problem. Some experts say the delays in these two western ports could be an indication of a logistics system that is quickly pushing to correct itself.

According to Zachary Rogers, who holds a Ph.D. in Supply Chain Management and is Assistant Professor of Operations and Supply Chain Management at Colorado State University, the two main reasons behind the congested ports are a record surge in consumer spending and an emerging e-commerce industry.

“We don’t really see supply chains fail,” Rogers said in a November presentation at Arizona State University. “I think in many ways, given this unprecedented demand that we are dealing with right now, we are seeing some kind of heroic effort.

“Part of we’re addressing that demand because we’re trying to catch up on a hole we’ve gotten into, and partly because Americans have a lot of money in their pockets right now. … People don’t travel, they don’t travel, they spend all their money on goods. “

With more cargo container ships calling at American ports than ever before to meet this demand, the US needs more infrastructure to load and unload cargo, more space to store products, more trucks and trains to move goods across the country, and more Factories.

Supporting each of these processes has its own set of problems: loading and unloading cargo requires both machinery and labor, and more storage space requires investment in land alongside shipping and e-commerce centers. Truckers are becoming scarce, fuel costs are rising and a semiconductor shortage is slowing down the production of new trucks. Additionally, manufacturing, an industry that Rogers said favors efficiency over flexibility, is facing delays due to overseas factory closures related to COVID-19.

“Really, there are a number of problems we have,” he said. “Firstly, much of the capacity in Asia is not currently online. … They’re closing factories in China, Vietnam, and everywhere.

“Boats don’t come in. … We don’t have enough containers. … Many of them are attached to the chassis we use to move containers across the docks. And one of the reasons we don’t have enough chassis is that we don’t have enough storage space. … We don’t have any space in the warehouse because we can’t outsource the stuff. “

These supply chain bottlenecks have resulted in one of the largest increases in consumer goods prices since 1990 – a 6.2% increase over the past 12 months for all goods, according to the Bureau of Labor Statistics consumer price index from October.

The dependence on foreign exports seems to be a recurring problem among experts dealing with the supply chain crisis.

In October, “we ran a $ 100 billion trade deficit due to our dependency on imports,” said US MP Peter DeFazio, D-Ore., Chairman of the House Committee on Transport and Infrastructure, in a hearing in mid-November. “The shipping cost for ocean shipping has increased 500% in the 12 months; the west coast is flooded with foreign imports. “

The main cause, said the congressman, is a lack of government oversight in the shipping sector and decades of “disinvestment” in American infrastructure, led by private shipping and logistics companies that are outsourcing production.

Possible solutions

Rogers said the answer to the crisis is threefold:

  • Diversify national imports by opening large ports in Florida, Texas, and the east coast.
  • Return of critical goods manufacturing to the US
  • Transfer of the nation to a more independent and efficient position through trade agreements with Central and South America for production and shipping.

He said the United States is lagging behind in diversifying its shipping system, which he identified as a prerequisite for the modern age.

“We do all of this with this old infrastructure. And that speaks in favor of supply chains – the good is the enemy of the great. We got through, so we struggled with suboptimal routes and capacities for a long time, ”said Rogers.

“COVID really is the wake-up call we need. With COVID, it’s not just a virus for the immune system … it has acted like a virus for the supply chains in many ways. … But if you survive, you’ll come stronger from the other side. “

Dave Wells, a research director at the Grand Canyon Institute, a non-partisan think tank, believes paying more truckers to attract and keep them could help make goods easier to move around during times of crisis. Studies show that the trucking industry has historically had a driver turnover rate that was 87% in 2021.

“This is kind of a challenge where some suppliers have difficulty hiring enough workers,” he said. “Truck drivers in particular need special IDs to collect shipments from overseas. There is a lack of drivers for this. This is mainly due to the fact that … the fluctuation rates are too high. “

Despite the challenges, Rogers believes the supply crisis offers the manufacturing and shipping industries an opportunity to improve in ways they desperately needed.

For more stories from Cronkite News, see cronkitenews.azpbs.org.

About Christine Geisler

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