Global supply change falters

Claire Rudinsky, Features Editor

Across the globe, supply chain shortages have slowed countries’ return to normal economies, and as consumers enter the holiday season, the pressure on the supply chain only continues to grow. Many businesses and consumers have bought their products much earlier, adapting to the slowed shipping, but worldwide, people are wondering how this disruption happened and how, or when it will be resolved. 

In the early stages of the pandemic, many companies shut down their production in order to limit COVID-19 infection because of their factories’ location in China. According to the United Nations Statistics Division, in 2019 China contributed 28.7 percent to the global manufacturing output. The United States lagged far behind in second place with 16.8 percent. Most companies made the assumption that the demand for products would drastically decrease due to a lack of consumer access to stores, restaurants and other shopping areas as entire countries went into lockdown. Yet as millions of people were confined to their homes, many began to buy large amounts of household products, whether it was supplies for a new office or toys to keep their children occupied away from school. The majority of these products were produced in China. Not only was there regular consumer demand for Chinese goods, there was also a worldwide demand for Personal Protective Equipment (PPE) for medical professionals, which is largely produced in China. 

Normally, supply routes flow from China to high consumption portions of the world, such as North America and Europe, but with the exorbitant demand worldwide for PPE, supply routes were disrupted and dispersed across the globe. Shipping companies can make more money transporting PPE solely from China to a new destination compared to their regular shipping patterns, where goods go back and forth. Shipping containers would be sent back empty from their destinations, rather than waiting for cargo to transport back to China. According to data from Freightos, an online freight market, it costs 17 times more to ship from China to the U.S. than from the U.S. to China. 

This has created traffic jams at some of the world’s largest ports; as of Nov.10, there were 111 ships waiting to enter the Los Angeles and Long Beach port, which is the largest port in North America. Usually, there are no ships waiting at anchor – this year, the number has been steadily rising since last spring. In October, President Biden declared that the port would move to 24/7 operations in an attempt to move more cargo and bring products to consumers faster. 

The supply chain disruption has not affected all companies the same; larger corporations can afford the higher costs of shipping and expedite their products, while smaller businesses order months in advance and are still left waiting for the necessary materials to complete their products. Businesses fortunate enough to produce domestically have been able to avoid in a large part the cost of shipping containers, but nationwide shortages of truck drivers have made deliveries slow and expensive as well. Due to their dependability, consumers are turning to big corporations like Amazon, Home Depot and other brand names to get the products they want rather than shopping locally. 

Farmers have also been disproportionately affected. Usually, shipping containers are transported to the middle of America and filled with a variety of grains before being exported. However, with both a truck driver shortage and a high demand for PPE, the shipping containers are often used for other means rather than farmer’s products. The National Milk Producers Federation has stated that the U.S. dairy industry has lost nearly $1 billion in the first half of the year alone due to high shipping costs and low exports. This disruption to the food supply chain has meant rising prices across the board, impacting food items ranging from chicken to cheese. 

The globalization of trade means that the effects of this disruption are being felt around the world, but it also means that creating a solution may be difficult. There is not one political body that could regulate the companies involved, and while Biden and his administration can implement policies for American companies, shipping corporations from other countries would not be affected.