The supply chain crisis is seeming like a never-ending nightmare that just keeps disrupting business and port operations and sending consumer prices to sky-highs. Chokepoints continue to emerge all across the system, and by now, nearly 70% of U.S. consumers believe that empty shelves have become the new normal. Meanwhile, Over 300 containerships are still stranded at sea, and the worsening labor shortage at key ports is threatening to result in a traffic jam that's unlike anything we’ve ever seen. On top of that, fuel costs are pushing freight rates to explode, and if you think you’ve already seen the worst of price increases at your local store, buckle up because they’re about to shoot all the way into the stratosphere.
One thing everyone can agree on at this point is that supply chains are terminally broken. In the U.S., one of the main reasons for that breakdown is the acute shortage of supply chain workers. Today, there are 5.5 million more job openings than there are workers available to fill them, according to the Labor Department. And as contract negotiations between longshoremen and operators of the nation’s largest ports remain adrift, U.S. companies are afraid of a repeat of last summer’s supply-chain chaos, which resulted in nationwide shortages and unprecedented price hikes.
The contract between over 22,000 dockworkers at 29 ports along the West Coast and the Pacific Maritime Association, composed of ocean carriers and port operators, expires at the end of this month. And up until now, both parties haven’t reached an agreement. If a deal isn’t closed within the next two weeks, millions of companies will be at risk of work stoppages and production slowdowns, just as happened during previous negotiations. The timing couldn’t be worse: the impasse comes as U.S. businesses are bracing for a surge in shipments from China as the world’s second-largest economy started sending massive loads of cargo all at once to the U.S. coast after lifting lockdown restrictions last month.
This is the perfect recipe for disaster, and it means we’re going to see a new wave of disruptions sparking chaos at our ports in a few weeks. That’s a quite alarming outlook, especially considering that supply chain disruptions skyrocketed over 400% over the past few years. According to data collected from Statista, in 2019, U.S. companies reported 2,568 supply chain disruptions from January to December. Back then, 56% of companies reported facing bottlenecks at some point in 2019. By 2021, that number climbed to shocking 11,642 disruptions, an increase of over 453,3%, which led 88% of companies to report supply chain snarls.
By now, every new survey, study, or report shows that conditions are still getting worse in the system. At the same time, everything is becoming more expensive. Onthe other side of the ocean, 344 are still waiting off the coast of China, marking a 34% increase over the past month. It currently takes 74 days longer to get goods from a Chinese warehouse to a U.S. warehouse, a route that used to take 37 days, according to RBC’s report.
Americans are already absolutely terrified about the rising cost of living. In fact, 52% of Americans said that the biggest issue facing the country was rising prices, according to a new FiveThirtyEight/Ipsos poll. Moreover, more and more U.S. consumers are seeing empty shelves as the new normal. According to a recent survey by SAP, 67% of Americans think product shortages are a “new normal” and 74% said shortages will continue to dominate supply chain conversation this year and into next. At least 77% of Americans reported food shortages this year, 52% reported shortages of personal care items, and 32% reported shortages of prescription medications.
This crazy economic environment is about to get even crazier as we head into peak shipping season. Shortages, even higher consumer prices and a whole lot of turbulence are now looming on the horizon. Get prepared for these challenges while you still can because supply chain disruptions will start to spread at a breathtaking speed before you even notice, and what we experienced in previous years will be nothing compared to the disorder that is ahead.
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