The Global Supply Chain Crisis of 2021: Here’s What to Expect
Go to a department store and try to buy a dress for a wedding. Can’t find one? It’s not just you. The shelves have been picked clean of countless different products, from clothing to certain food items and takeout boxes. The items that we used to take for granted seem to be in short supply. Prices won’t quit climbing. But why? Our global supply chain wasn’t built for e-commerce in the first place.
To Start, the System Was Already Struggling
When a customer placed an order 20 years ago, they expected to receive their package in a couple of weeks. Now, we get antsy if it’s been a couple of days. The global supply chain, however, has struggled to meet the demand for more and more products to be delivered faster than ever.
While ordering a product online might seem like the easy option, there’s more to it behind the scenes. The process to actually manufacturer a product, sell it, and deliver it to your doorstep is complex. First, the supplies to produce the product need to be shipped to the manufacturer. Then, the products have to make their way through a complicated import and export system to make it to U.S. retailers. Then, products are shipped, often being passed through many hands before they make it to your door.
Unfortunately, the supply chain is like a freeway. When it’s running smoothly, traffic speeds along. It only takes one driver slamming on their breaks, however, to slow down the entire system. In this case, slowdowns are happening at every step of the supply chain. The issue is causing a bottleneck that’s hard to remedy.
The Pandemic Made Existing Supply Chain Woes So Much Worse
It was already challenging for the logistics world to keep up with our increasing demand for products to be delivered instantly before the pandemic. When lockdown occurred, people relied on e-commerce even more, straining an already struggling system. Supply crunches are usually short-lived. We spent, however, over a year buying more tech gadgets, toys, sporting goods, furniture, and DIY supplies than ever before.
Manufacturers are still struggling to adjust to the dramatic shift in consumer demand patterns, while simultaneously dealing with pandemic-tied labor shortages, closures, and shipping delays.
In the simplest of terms, when the pandemic began, transportation systems were forced to slow down and scale back thanks to restrictions on air travel and quarantine requirements. When the Western world began to return to higher levels of economic activity, however, there weren’t enough hands to process the elevated shipping volumes.
At times, ships anchor outside of ports for weeks waiting for the room to dock, because shipments simply aren’t getting unloaded and reloaded fast enough. Those delays contributed to skyrocketing shipping expenses, with the cost of shipping a container from Asia to the East Coast rising more than tenfold. It was about $1,400 pre-pandemic. Now, mid-2021, it has risen to around $20,000. While the market has stabilized at these higher rates, the future is hazy. Subsequent COVID-19 outbreaks could potentially cause more delays and drive prices higher yet again.
How Logistics Companies Play a Role
With the entire logistics world interlaced, problems never affect shipping at just one level. Shipping companies are facing a driver shortage across the board. The result? Higher shipment prices and backed-up deliveries across the board.
While trucking companies are doing their best to meet demands, the ongoing labor shortage has made it a challenge to keep up the pace.
The Forecast for the Future of the Supply Chain
It’s a complex issue and one that won’t be fixed overnight. For consumers, that means ordering gifts for the holidays should be done sooner than later. For business owners, that means business operations are likely to remain more costly and complicated for some time.
Without government interventions, relief isn’t expected until well into 2022.
As a company dedicated to supporting locally owned businesses, BYX is doing our very best to weather the labor shortage. Our goal, as always, is to manage changing times with the least impact on our clients possible. As a family-owned business, we empathize with your frustration and concerns. It’s not easy, but it won’t last forever, so hang in there.
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