Supply Chain

1. Operations keep shutting down. A giant port in Shanghai shut down recently because of a positive COVID test. Warehouses are frequently understaffed or closed, we're still getting things back on track after the Suez Canal closure, and even the functioning ports keep dealing with container shortages. The pandemic halted most industries, and getting things back up and running is proving to be a big headache. That makes every hiccup, big or small, feel like a major disruption. In the beginning, it was that people simply weren't supplying. Now we've got people trying to ramp up supply and hitting significant roadblocks.

2. Cost of shipping is way up. In some routes, the cost of sending a container overseas has jumped more than 300% in the last two years. Shipping channels are so bottlenecked that companies can probably keep jacking up prices without losing any business. Now is a particularly busy time as retailers try to get properly stocked before the holidays, so there's not much hope for that bottleneck going away until 2022. This problem might be the scariest because consumers have already seen prices go up but we haven't had to shoulder much of the increased shipping cost yet. There's concern that a continued rise in container price might have us paying notably more for everything we get.

3. Changing approach. I've read about a handful of companies that have sought out new manufacturers just so they wouldn't have to deal with receiving goods via boat. More and more supplies are being moved by plane, train and automobile, though we're also experiencing a truck driver shortage. These changes have the potential to drive up costs, but we have to wait and see how the ripple effect plays out. It's always impressive to see necessity as the mother of invention in real-time, as businesses will find a way to provide and consumers will find a way to buy. Nevertheless, strained supply will continue to squeeze demand and you and I will feel it at the cash register.