Supply Chain Mess

By Alex Gryciuk 

Shortages of everyday goods, including cream cheese and cars, plague the world; exposing another detrimental effect of COVID-19 on our daily lives. Of course, the pandemic has taken away our social lives and caused an unprecedented crash in the global economy. But, another horrible effect of COVID-19 is a build up in our supply chain. A supply chain, according to Investopedia, “is a network between a company and its suppliers to produce and distribute a specific product to the final buyer”. In other words, it is a complex system of resources, services, delivery, etc, of how things get to consumers. It starts from an idea all the way to the consumer ending up with the product. However, during the COVID-19 pandemic, the supply chain for many products slowed down or lost a link all together. 

In all parts of the supply chain, employees are essential to ensure that the supply chain continues to run smoothly; huge shortages of employees cause the supply chain to break or slow down its process. During the beginning of the pandemic, many companies laid off workers due to “widespread commitment to public safety” during outbreaks and local mandates according to the Society of Human Resources Management. Later on when the economy continued to decline, companies cut costs and laid off millions of workers to keep their businesses afloat. However, now, even when the economy seems to be getting better, companies continue to struggle finding employees. In fact, according to CNBC, in the United States there are 10 million vacant job openings. Despite large amounts of job openings, people do not obtain a job because of a lack of urgency to work, early retirement, lower immigration, high quitting rates, strikes and a smaller young workforce in addition to COVID-19 regulations. Regardless of the reason, as companies continue to search for employees, vacant job openings cause the supply chain to slow down or have missing parts all together. If worker’s can’t complete their job due to a lack of labor, then the entire supply chain staggers. A clear example is caused by a labor shortage in the warehouse and shipping industry. In the Port of Los Angeles a lack of employees to unload goods, caused huge shipping delays across the whole country. 

As some companies fulfill employee needs, the supply chain is also slowed because some manufacturers cannot fully manufacture their product. Most manufacturers rely on other companies or factories to make the necessary parts for their own products. For example, most technology or cars need semiconductor chips to run.Yet, global shortages from other parts of supply chains slowing down (employee shortages or also manufacturing unable to occur too) causes huge production delays or temporary shutdowns. A devastating example from Consumer Reports “Cadillac that it would temporarily suspend the Super Cruise driver assistance and monitoring technology from its Escalade SUVs” due to cars still waiting on the assembly line. Cars are not exclusively suffering from a manufacturing break in the supply chain. Goods like paint which lack necessary pigments and bottles to complete their manufacturing are also affected greatly.

Even in the best case scenario where labor and material demands are fulfilled, companies cannot even ship their products out. Leaving warehouses full, a huge lack of shipping containers plagues 60% of global trade conducted with shipping containers. When the pandemic just started, China sent shipping containers full of COVID supplies and relief all over the world. According to the New York Times, many of those containers end up in “regions like West Africa and South Asia” that “generally do not send much product back to China”. As a result, many shipping containers that would have normally been used to ship out goods, piled up in other parts of the world. Not only did the ability to ship goods decline, but also the cost to ship goods skyrocketed. According to Deutsche Welle, “transporting a standard 40-foot (12-meter) container on a ship sailing from a Chinese port costs about $1,000” before 2020. But during the pandemic, shipping costs “up to $10,000”. Simply put, companies lose excessive amounts of profit due to high shipping costs and demand and many containers get bumped off ships; further adding to container shortages. Therefore, companies often wait months to even ship their manufactured goods because of shortages.

In all, COVID-19 has not only impacted daily social interactions but has also created huge shortages of goods for the consumer through labor, material, and shipping container shortages resulting in a big supply chain mess.