Peter Goodman of the New York Times writes today about our supply chain crisis:
With the havoc at ports showing no signs of abating....Many months, and perhaps years, are likely to transpire before the chaos subsides....Mayhem at factories, ports and shipping yards....The tightness in warehouses helps explain why American ports remain seized by dysfunction.
Yikes! The message here is pretty clear: we're screwed. How is this playing out?
Over the last three months, container ships unloading goods have remained at American ports for seven days on average, an increase of 4 percent compared with all of 2021 and 21 percent higher than at the start of the pandemic, according to FourKites, a supply chain consultancy based in Chicago.
So on average, all this havoc, chaos, mayhem, and dysfunction has caused the time container ships spend at American ports to skyrocket from . . .
. . . about six days before the pandemic to seven days today.
Am I the only one who thinks this doesn't really seem all that disastrous? Obviously some ports are in worse shape than others—Los Angeles is the go-to example—but the nationwide average is what really matters. And it just hasn't changed that much.
This whole crisis framing really needs to stop. By now it should be obvious to everyone that our problem isn't a "supply chain crisis." Our problem is that we're experiencing sharply higher demand that nobody predicted, and even then only for certain products. In other words, our supply chains are producing more than they have before, but we haven't been able to ramp up our infrastructure instantly to handle it. That would be true no matter what. It's baked into the cake when you have to deal with a sudden change that no one forecast.
I don't have the chops to write this, but I'm pretty convinced that given the length, severity, and global reach of COVID-19, our supply chains have managed surprisingly well. There are miscellaneous shortages here and there, but nothing very severe. Maytag says you might have to wait a few weeks if you want a new washing machine. Cars are in short supply because car manufacturers are idiots who assumed COVID would depress demand forever. Supermarkets often have a few items that are temporarily out of stock. Most of this just isn't that serious.
Overall, I think this is pretty impressive performance. Who's the expert who can tell this story?
I'm still waiting for my custom La-Z-Boy recliner I ordered last spring, but other than that haven't felt much pain with the supply chain situation. Yeah, can't always get my first-choice brand at the grocery store, but almost always there is an acceptable substitute. Prescription drugs have sometimes been a problem, but mostly I'm peeved Kellogg's suddenly quit making Corn Pops.
Some drugs are having runs because of the latest anti-vaxxer craze. That's affected people with Lupus to those with acid reflux. Others end up affected indirectly, losing out to Covid for needed resources. We're still seeing games being played with older drugs and drug delivery mechanisms too.
"I'm peeved Kellogg's suddenly quit making Corn Pops."
Since Joe Biden took care of that bad dude....
Well my La-Z-Boy showed up today! But I'm on a long wait list for a new CPAP 🙁
LA is around 17% of all incoming cargo. Saying "LA is obviously mucked up" and then writing it off as some kinda of singular exception, without acknowledging that it is the single largest port in the US (closely followed by Newark) doesn't really support the overall point of this post.
I do think the broader point that it's an issue with certain goods, not goods overall, is salient.
Kevin is looking at an aggregate figure. If delays are up that much in Los Angeles, it necessarily means that unloading times are shorter at other ports. The overall effect on supply chains is negligible.
Not an expert==but that's never stopped me before!
It's a matter of framing. Yes, there were all sorts of problems when the pandemic first hit. Then those problems, like the virus, mutated.
But be careful about look at averages. Larger importers took things into their own hands to keep their shelves stocked. Smaller players were still stuck with longer times--though most of that is clearing up by now. You're right, no stolen Christmas, but Biden won't get any credit for helping to improve things.
This did highlight supply chain problems. Rail capacity has dropped, and that's been going on for a while. Why--because everyone makes more money that way even if it is more carbon intensive.
In general, we have little to no excess capacity. Optimal for making money, but not so good for the nation. Interestingly, a number of academic labs turned themselves into PCR testing labs. The labs don't do patient care--but they can be repurposed to help fight pandemics.
Not just a matter of framing.
A large part of the country is very invested in the mythos of incompetent elites (because, of course, that justifies whatever radical change they're currently demanding).
To admit that "we" (ie our elites and business class) handled a difficult and unexpected situation remarkably well would rather diminish the strength of all those demands for change...
I have to wonder if some of that is playing games. The company I work with has had a container from Italy that we've been waiting for since around November now. It originally had a port date of the 17th of January but as of today they've got no idea when it's even going to get into port.
So right now it's not 'remaining in an American port' but it's been circling south around Baja since about the 10th of January waiting to go up to Long Beach to get unloaded.
If you consider this doomsaying on the part of the lamestreamers at the Sulzberger Advertiser as a piece of their mission to reinstall El Jefe Maximo de Maralago as Presidente por Vida, the reporting makes sense. It's still Joeroganian-grade horseshit, but its purpose is clear.
I don't know what supermarkets you go to but the neighborhood one I went to yesterday has yards and yards of empty shelves.
Really? Where are you? I’m in the SF Bay Area and none of the grocery stores are like that. Mostly fully stocked with one or two holes here and there. Barely noticeable.
It your in the midwest, your point is irrelevant. If your not in the midwest, your lying.
I'm in the Midwest, Minneapolis specifically. I wouldn't say that there are massive shortages here, but there are definitely some things missing from shelves, and a fair amount of empty space, at every grocery I go to.
I'm in Chicago and I haven't seen any shortages at all. But we are the logistics capitol of the country so that may have something to do with it.
Nope. Total wait times have declined 50% since the fall. Inventory is beginning to recover and will likely be finished by spring. A lying journalist is a dead journalist.
This data certainly doesn't attempt to capture the trucking and warehousing delays, nor does it capture the products that have shortages and never make it on a ship and I dont think it captures the time ships spend waiting to dock outside of the port.
This looks like we are ignoring most of the supply chain problems and declaring there are no problems, plus waving off the identified problems and delays at the largest port in the US.
Not to say that the 'crisis' hasn't been blown out of proportion.
. . . about six days before the pandemic to seven days today....Am I the only one who thinks this doesn't really seem all that disastrous?
That's about a 17% increase. That sounds pretty disruptive in a just-in-time world.
On the other hand, America is not as dependent on important as other high income countries.
So it's hard to say. I do agree the journalist's language is florid, and his contention that the situation shows no signs of improvement (really? none at all?) seems implausible.
*dependent on imports
I thought you were going to say we were dependent on trivial, in which case I would have agreed.
Some products in the supermarkets near me are just chronically low or out of stock. It’s very hard to find apple sauce or cream cheese, for example. Are these staples that I can’t live without or find substitutes for? No, but I’ve never seen anything like it before and it does speak to some kind of supply chain issues with those products.
This post is why applesauce is a polite way of saying bullshit.
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The supply chain problems caused by the pandemic are trivial compared to the problems that would follow a conflict with China over Taiwan. A sudden suspension of imports from China, Taiwan and perhaps a broader part of Asia would be incomprehensibly catastrophic to the US economy. Which is why, if push comes to shove, I don't believe Biden would go to war.
Not sure the numbers back up that assertion, total trade with China in 2020 was $615 billion in goods and services with a deficit of $285 billion. 2020 GDP for the US was $20.94 Trillion. Total trade with Taiwan was $106 billion with a deficit of $27.6 billion. That means China and Taiwan amount to about 3.5% of the US total GDP. Would a war with China over Taiwan cause serious problems with getting an iPhone or any thing built with a cutting edge semiconductor process, yes. I am not sure it would cripple the US economy. If the US is able to put off the confrontation for a couple of years, TSMC will have production facilities based outside of Taiwan which would mute the semi conductor shortages.
War with China would not be good for commerce, might be good for long term global hegemony. As with the current Ukrainian Russia affair it comes down to who has the most to lose.
There are numerous parts, components and inputs that can only be found in China. Trump's own trade representative, in a moment of candor, stated "decoupling" the two economies is flatly impossible. A complete and sudden cessation of Sino-US trade would indeed be catastrophic for the US economy.
However, all this talk of economic disruption is kinda besides the point: when have the belligerents in a great power wars managed to avoid using their most powerful weapons systems? It seems to me the black swan risk of a nuclear exchange is the real danger flowing from a US military response to a PRC invasion of Taiwan.
I don't think China would be too eager to throw several hundred million of its citizens out of work, either.
...any thing built with a cutting edge semiconductor process...
These days that is a large subset of durable goods - phones, computers, cars, home appliances, medical devices, entertainment systems, hvac - everything is "smart" now and we don't make the smarts anywhere but China (unless it
is something for DoD)
There are companies starting to reinvest in semiconductor production here in the states (e.g. Intel in Ohio, Wolfspeed (Cree) in NY), but these facilities are very expensive/complicated and take years to bring online, staff with workers, etc. So our dependence on PRC/Tawain/Korea will continue for the time being.
"Where's the expert who can tell this story?"
Ha. NOBODY can tell this story. Printing these facts would brand the media outlet as "librul"! Can't be done! Wouldn't be prudent! No, sir!
Definitely large holes in the shelves at my store in the NW. It has been this way for about a year. Some products are getting worse. It seems difficult for the stores to spread something no one buys across many open spaces. Certainly makes it obvious.
Completely, agree, Kevin. Stop catastrophizing, American. Things are fine.
There seems to be a rather massive disconnect between high level data and experience on the ground. (Anecdotes is not data they say. But a collection of identical anecdotes is data alright).
Go to an IKEA of your choosing, select a nice piece of furniture you want to buy. The odds of the store having it available has been about 2 : 1 against you in recent months and improvements are not in sight.
Powerful actors (like GM) have found ways to supply themselves but consumers still have problems.
Most of the time, these supply chain issues aren't going to dramatically affect your daily life. But then people need to buy a couch, or repair a washing machine, for example. I was told by a repairman the other day that Whirlpool/Maytag is telling vendors their parts backlog now extends over one year. That means if your Maytag washer goes out right now, you're basically looking at having to buy a new washer.
Consumers notice that.
Ikea does seem to have been uniquely incompetent in how they handled the pandemic. But *unique* is important in that phrase...
I don't know if this was *somewhat* justified by their particular circumstances (nature of supply chain, nature of product, whatever), but given how terrible their web presence was (and still somewhat remains) I think a better explanation is that they were almost uniquely backward looking among large consumer corporations; and are not especially representative.
More to the point, we're experiencing a spike in demand for consumer products that are virtually all made overseas, namely in China, which is still using strict lockdowns and quarantines to fight Covid, and which is still struggling to rightsize the falloff in shipping container traffic flows. That's impacting, naturally, stuff imported from China (virtually all household consumer goods) as well as stuff made with Chinese or Asian components.
As I've said here before, the just-in-time inventory system and global supply chain American businesses have perfected over the last decade or two worked great until a global pandemic totally fucked up one component -- shipping container availability in Asia -- and the whole thing came crashing down.
Except it DIDN'T come crashing down, did it? It became slightly inconvenient for a few products for a few months.
If that's your worst case scenario, I see very little motivation to change the system.
Those empty containers are stacked all over the US because it's more profitable to turn a ship around and send it back to China empty to get another load than it is to reload it with empty containers or even ones full of Minnesota soybeans perfect for making Chinese tofu. The shipping cos are making a mint on pandemic prices. So are the railroads.