Finding Solutions to the Global Supply Chain Crisis
PHOENIX – It’s the holiday season, but not everyone is happy and bright. That’s because vacation shoppers are paying higher prices and seeing a few more empty shelves this year thanks to a “global supply chain crisis” – a phrase that has become all too familiar during dinner conversations.
And as Americans continue to face empty shelves and rising prices at the end of 2021, experts are examining the causes and potential solutions.
COVID-19 has been the catalyst for this widespread series of supply bottlenecks, but these restrictions have affected nearly every sector of the economy – from shipping and trucking to manufacturing and storage.
Most importantly, it’s an issue that plagues everyday consumers, like Becky Andrews, a downtown Phoenix customer.
âOverall, prices have jumped,â she said. âI came to get (an item) and it was $ 3 more than before, and I just didn’t get it. So I think this will affect a lot of families. “
The underlying issues
Two of the largest US seaports, the Port of Los Angeles and the adjacent Port of Long Beach, are experiencing delivery delays, but that’s not the only problem. Some experts say the delays at these two western ports could be a sign of a logistics system that is quickly seeking to correct itself.
According to Zachary Rogers, who has a doctorate. in supply chain management and assistant professor of operations and supply chain management at Colorado State University, the two main factors behind blocked ports are a record increase in consumer spending and a booming e-commerce industry.
âWe don’t really see supply chains failing,â Rogers said at a November conference at Arizona State University. âI think in many ways we are witnessing some sort of heroic effort in the face of this unprecedented demand that we are facing right now.
âIn part, we are facing this demand because we are trying to make up for a hole that we have found ourselves in, and in part because Americans have a lot of money in their pockets right now. â¦ People don’t go on a trip, they don’t go elsewhere, they spend all their money on goods.
With more container ships than ever sailing through U.S. ports to meet this demand, the U.S. needs more infrastructure to load and unload cargo, more space to store products, more trucks and trains to transport goods across the country and over factories.
Strengthening each of these processes presents its own problems: loading and unloading cargo requires both machines and workers, and more storage space requires investment in land adjacent to shipping centers and of electronic commerce. Truckers are scarce, fuel costs are rising, and a semiconductor shortage is stalling production of new trucks. Additionally, manufacturing, an industry that prioritizes efficiency over flexibility, according to Rogers, faces delays due to COVID-19 overseas plant closures.
âReally, we have a series of problems,â he said. âFirst of all, a lot of the capacity in Asia is currently offline. â¦ They are closing factories in China, Vietnam and everywhere.
âThe boats cannot enter. â¦ We don’t have enough containers. â¦ A lot of them are stuck on the chassis that we use to move containers on the docks. And one of the reasons we don’t have enough chassis is because we don’t have enough warehouse space. â¦ We don’t have space in the warehouses because we can’t move the material.
These supply chain bottlenecks created one of the biggest price increases for consumer products since 1990 – a 6.2% increase in the past 12 months for all goods, according to the Bureau of Labor Statistics October consumer price index.
Dependence on foreign exports appears to be a recurring problem among experts facing the crisis in the supply chain.
In October, “we ran a $ 100 billion trade deficit due to our dependence on imports,” said U.S. Representative Peter DeFazio, D-Ore., Chairman of the House Transportation Committee. and infrastructure, at a hearing in mid-November. âShipping costs have increased by 500% over the past 12 months; the west coast is inundated with foreign imports.
The main cause, the congressman said, is a lack of federal oversight of the shipping industry and decades of “divestment” in U.S. infrastructure led by private transportation and logistics organizations outsourcing manufacturing to. abroad.
Rogers said the response to the crisis is threefold:
- Diversify domestic imports by opening major ports in Florida, Texas and the East Coast.
- Return critical product manufacturing to the United States
- Move the nation to a more self-reliant and efficient position through trade treaties with Central and South America for manufacturing and shipping.
He said the United States was lagging behind in diversifying its navigation system, which he called a requirement for the modern age.
âWe do all of this with this old infrastructure. And that speaks, for supply chains – that the good is the enemy of the good. We were able to get through, so we had to deal with sub-optimal routes and capacity for a long time, âsaid Rogers.
âCOVID is really the red flag we need. With COVID, it’s not just a virus for immune systems … in many ways, it’s acted like a virus for supply chains. â¦ But if you survive it, you’ll come out on the other side stronger.
Dave Wells, research director at the Grand Canyon Institute, a non-partisan think tank, believes paying truckers more to attract and retain them could help move goods more easily amid the crisis. The trucking industry has historically had a driver turnover rate, according to studies, and it was 87% in 2021.
âIt’s kind of a challenge where some vendors are struggling to hire enough workers,â he said. âTruck drivers, in particular, need special credentials to pick up shipments from overseas. There is a shortage of drivers to do this. A big part of that is becauseâ¦ the turnover rates are too high.
Despite the challenges, Rogers believes the supply crisis offers the manufacturing and shipping sectors a chance to improve in ways they desperately need.