Computer chips. Exercise equipment. Breakfast cereal. By now, you’ve probably heard: The world has run short of a great many products.
In an era in which we’ve become accustomed to clicking and waiting for whatever we desire to arrive at our doors, we have experienced the shock of not being able to buy toilet paper, having to wait months for curtains and needing to compromise on the color of our new cars.
Of far greater importance, we have suffered a pandemic without adequate protective gear. Doctors cannot obtain needed medicines. In Alaska, people are struggling to find enough winter coats. Airplanes are delayed while crews wait for food deliveries.
Why is this happening?
The pandemic has disrupted nearly every aspect of the global supply chain — that’s the usually invisible pathway of manufacturing, transportation and logistics that gets goods from where they are manufactured, mined or grown to where they are going. At the end of the chain is another company or a consumer who has paid for the finished product. Scarcity has caused the prices of many things to go higher.
The disruptions go back to early last year, to the beginning stages of the pandemic. Factories in parts of the world where a lot of the globe’s manufacturing capacity sits — places like China, South Korea and Taiwan as well as Southeast Asian nations like Vietnam and European industrial giants like Germany — were hit hard by the spread of coronavirus cases. Many factories shut down or were forced to reduce production because workers were sick or in lockdown. In response, shipping companies cut their schedules in anticipation of a drop in demand for moving goods around the world.
But Americans took the money they used to spend on such experiences and redirected it to goods for their homes, which were suddenly doubling as offices and classrooms. They put office chairs and new printers in their bedrooms, while adding gym equipment and video game consoles to their basements. They bought paint and lumber for projects that added space or made their existing confines more comfortable. They added mixers and blenders to their kitchens, as parents became short-order cooks for cooped-up children. The timing and quantity of consumer purchases swamped the system. Factories whose production tends to be fairly predictable ramped up to satisfy a surge of orders.
Why couldn’t factories just produce more?
Many did, but this produced its own troubles. Factories generally need to bring in components to make the things they export. For example, a computer assembled in China may require a chip made in Taiwan or Malaysia, a flat-panel display from South Korea and dozens of other electronics drawn from around the world, requiring specialized chemicals from other parts of China or Europe.
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The steep surge in demand clogged the system for transporting goods to the factories that needed them. At the same time, finished products — many of them made in China — piled up in warehouses and at ports throughout Asia because of a profound shortage of shipping containers, the standard-size steel boxes that carry goods on enormous vessels.
What happened to all the giant container ships?
In simplest terms, they got stuck in the wrong places. In the first phase of the pandemic, as China shipped huge volumes of protective gear like masks and hospital gowns all over the world, containers were unloaded in places that generally do not send much product back to China — regions like West Africa and South Asia. In those places, empty containers piled up just as Chinese factories were producing a mighty surge of other goods destined for wealthy markets in North America and Europe.
Because containers were scarce and demand for shipping intense, the cost of moving cargo skyrocketed. Before the pandemic, sending a container from Shanghai to Los Angeles cost perhaps $2,000. By early 2021, the same journey was fetching as much as $25,000. And many containers were getting bumped off ships and forced to wait, adding to delays throughout the supply chain. Even huge companies like Target and Home Depot had to wait for weeks and even months to get their finished factory wares onto ships.
Meanwhile, at ports in North America and Europe, where containers were arriving, the heavy influx of ships overwhelmed the availability of docks. At ports like Los Angeles and Oakland, Calif., dozens of ships were forced to anchor out in the ocean for days before they could load and unload. At the same time, truck drivers and dockworkers were stuck in quarantine, reducing the availability of people to unload goods and further slowing the process. This situation was worsened by the shutdown of the Suez Canal after a giant container ship got stuck there, and then by the closings of major ports in China in response to new Covid-19 cases.