From the October 2021 print edition
Now is a chaotic and challenging time for global supply chains. So much so, it’s hard to decide where to begin a description of the situation. Yet I’ll attempt to catalogue a few of them. As I write this, a bottleneck in California means 62 container ships are waiting in the waters near the Port of Los Angeles to unload cargo.
As with supply chain problems generally, several factors have conspired to create the situation. For example, the Suez Canal blockage in late March and the partial shutdowns of the Yantian and Ningbo ports in China have all contributed to the backlog.
Gas shortages in the UK have caused panic buying there. The haulage industry notes that the UK has lost tens of thousands of truckers due to the pandemic, an aging workforce and foreign workers departing Britain following Brexit. Other countries, including the US and Germany, are seeing a serious shortage of truck drivers as well.
The semiconductor shortage has hit manufacturers of everything from smartphones to cars. The crisis has no end in sight and will likely cost the auto industry alone $210 billion in revenue this year.
Another example of supply chain turmoil involves plastic resins – tiny plastic pellets used in products including bread bags and milk containers. These have been hit by high demand, tight supply and soaring prices. The shortage has its roots begininng early last year with the spike in PPE sales, often using single-use plastic, combined with demand for plastics from consumers stockpiling products like toilet paper (wrapped in plastic) and other factors.
Erratic weather has also hit supply chains. Cold weather in Texas in February exacerbated supply chain woes, for instance. Meanwhile, drought conditions have meant that Canada’s two largest railways may run out of grain to move, which in turn hits their revenue.
Of course, supply chain professionals are used to dealing with unforeseen issues. Indeed, there have been many other events that have thrown supply chains off balance in the past. The 2008 global financial crisis, the eruption of Iceland’s Eyjafjallajökull volcano and the 2011 nuclear accident at the Fukushima Daiichi Nuclear Power Plant in Japan had, within a few years, ripple effects that slowed the flow of goods globally.
This shows that the interconnected nature of modern supply chains, while advantageous in many ways, can also cause problems. When we’re wrapped up in such turmoil, it may seem like the volatility will never end.
In a sense, that’s true; just like life, supply chains will never be completely problem free. But that’s part of the game, and something supply chain leaders are equipped to deal with. Supply chains will find equilibrium eventually as some of the challenges I’ve noted fade.
That may take some time, but it’s going to happen. Until then, supply chains are guaranteed rarely to be boring.