A container ship stuck in the Suez Canal and chronically backed up ports have caused shipping delays of goods from China to the United States. It's both a symptom of and representative of a larger supply-chain problem, one that can be traced all the way back to the beginning of the pandemic, says Scott Grawe, chair of the department of supply chain management at Iowa State University.
The effects of factories in Wuhan shutting down for a few weeks at the beginning of 2020 is just now being felt by Americans. "What that did was stop the flow of containers and goods, but the demand never stopped here," Grawe says.
For shoppers, that means you're likely to continue to see shipping delays and other issues. Here's how hiccups in the global supply chain affect you.
There is a "global imbalance of containers," Grawe says. Factories in China are back up and running, he says, and are producing goods at pre-pandemic levels. However, they have nothing to put these goods in to send them to consumers, because the shipping containers are stuck in the United States.
"You've got factories in China that are begging for containers, and we can't get the containers back to them fast enough," Grawe says.
Ports in the U.S. are operating with reduced workforces due the Covid-19 restrictions, meaning they are unable to unload containers and send them back to China as quickly as China could use them.
Normally, only a day or two passes between the time the ship arrives in the port and it being unloaded, says Tony Nuzio, founder of ICC Logistics Services. In recent months, "the backlog on the West Coast has been delayed for weeks or months," he says.
The uptick in online ordering compounded with supply chain hiccups is likely to result in many shipping delays and stores having less stock. This will affect electronics, home appliances, clothing, and more.
"We are seeing significant delays and backups on appliances coming from overseas," Grawe says. "It's primarily a result of delays and a shortage of container ships coupled with demand as people remodel and build new homes." So items like refrigerators will probably take longer to get to you.
"It does affect all products," Nuzio says. "When you're talking about durable goods there's no question there's been a delay. There's delays on building products. When you go to Lowe's or Home Depot and are looking for circuit breakers, there just isn't inventory."
These supply issues are happening now and will persist for the rest of the year, Nuzio says.
Because demand for shipping is so high, the price distributors need to pay to get their goods on a container ship will rise, Nuzio says. Whichever distributor offers the best price will be prioritized by shipping companies.
"People are now paying extra premiums to get their containers shipped," Nuzio says.
Once this trickles down, it will "increase the cost of goods at the purchasing level," he says. That means customers will pay higher prices for what they buy.
It will take a while for the supply chain to recalibrate and start working the way it did pre-pandemic, Grawe predicts. "There are expectations and delivery times and routes that these ocean vessels run," he says. "When things come to a halt, it's hard to play catch-up."
Unfortunately, this is not a problem that can be fixed quickly, Nuzio says: "We're going to have another year of these delays. No question."
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