Buyers Fueled ‘Everything Shortage’: Supply Chain Experts

  • Experts say consumers fueled the supply chain crisis by purchasing more goods during the pandemic.
  • Online spending has exploded in recent years, causing delays at ports and warehouses.
  • Buyers can help ease the crisis by buying less and buying second-hand or locally.

The global supply chain has exceeded its limits and experts say consumers are more than partly to blame.

From panic buying to 2-day shipping expectations, consumers have helped fuel the supply chain crisis. Insider spoke to 12 experts in labor, logistics and economics who said shoppers were at least partly responsible for supply chain disruptions that left store shelves empty and resulted in price increases.

“We are a community [of consumers] that supports a very short-term view of things, and in doing so, we remove any resilience in the supply chain, ”said Gad Allon, director of the Jerome Fisher program in management and technology at the University of Pennsylvania. .

Increases in demand associated with COVID-19 closures at ports and warehouses have left supply chain workers struggling to make up for lost ground. The largest US port has 30% more cargo passing through it and 28% fewer workers to handle the unloading of product.

More goods than ever in the supply chain

In 2020, global consumers spent $ 900 billion more online than in previous years, and spending continues to skyrocket. In the first half of 2021, global consumer spending grew 22% year-over-year, an increase of $ 3.2 trillion, according to Tony Pelli, director of security and resiliency at BSI.

Demand has grown so rapidly over the past two years that it equates to about 50 million new Americans joining the economy, Jonathan Gold, vice president of supply chain policy at the National, told Insider. Retail Federation.

“There are very few industries, if any, that could handle such an acceleration in demand, especially considering the lack of scalability of the supply chain infrastructure and manufacturing base. “, did he declare.

The supply chain operates at a breakneck pace

Several dockworkers at the Los Angeles and Long Beach ports – locations responsible for importing around 40% of U.S. goods – told Insider it was a major misconception that the backlogs came from lower productivity levels. .

In 12 of the past 13 months, the Port of Long Beach has broken monthly records for the amount of cargo it handled. Since July, the port has handled 5.5 million 20-foot sea containers (TEUs), an increase of 32% year-on-year. Likewise, the Port of Los Angeles handled 6.3 million TEUs in 2021.

Even at a breakneck pace, ports face infrastructure constraints. What was built to handle 30 to 40 ships at a time suddenly cannot accommodate more than 150 ships.

“It’s not like the ports have gotten slower or retailers are suddenly choosing to move their goods through these California ports,” Douglas Kent, executive vice president of strategy and alliance, told Insider. at ASCM. “It’s that people are buying more and we don’t have the infrastructure to support their buying habits.”

The immediate solution? We all consume less.

Experts told Insider that further disruption could be avoided if consumers cut back.

“It wouldn’t be good for the economy, but if the people who were stuck at home started spending their money on experiments, instead of goods, we would see fewer ships coming in and out of these ports,” said Mike Tran, RBC Capital Markets Analyst. Initiated.

While a complete stop to online shopping seems unlikely, especially ahead of the holiday shopping season, experts told Insider that shoppers may play a smaller role by buying early, saving money, and buying locally.

Bayard Winthrop, founder and CEO of American Giant, told Insider that buying locally and focusing on products made in the United States would help reduce the pressure on the strained arteries between Asia and the United States, while by supporting small businesses that are often left out of the equation by retail giants. like Amazon and Walmart.

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About Bob C. Zoller

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