The days of Amazon one-day shipping may be in danger. As the Biden Administration’s first year in office comes to a close, the effects of COVID-19 linger. The national and global supply chain issue is prevalent in the minds of consumers, businesses, and transporters, as many people see empty shelves and delayed product orders. Ports all over the coasts of the United States and Europe are backed up, with few workers to process the shipments. Many ports like the port in Yantian, in the Chinese province of Guangdong, closed in the early summer of 2021 due to COVID-19. Yantian, although only being shut down for about a week, is still operating below capacity. The effects of Yantian’s closure were felt in other ports such as Shekou, Chiwan, and Nansha, causing further delays in the shipping industry.
On October 31st, 2021, President Biden held a summit on Global Supply Chain Resilience with the EU and fourteen other countries. The White House’s goal is to “foster greater international cooperation on near-term supply chain disruptions and chart a course to strengthen and diversify the entire supply chain ecosystem over the long term—from raw materials, intermediate and finished goods, manufacturing, to shipping, logistics, warehousing, and distribution.” The Fact Sheet includes goals such as streamlining U.S. stockpiling efforts and increasing funding for trade facilitation activities to cut red tape.
With the global economy shut down due to COVID-19, the whole world saw areas in which economies were (and still are) vulnerable. For example, in the U.S., the meat industry was in danger due to the closure of many large processing plants. Farms had to rely on local processing to slaughter their animals, causing huge backups. Since most large store chains receive supplies from these plants, many deli shelves were empty, while farmers had no choice but to euthanize animals.
Another issue is the production and shipment of semiconductors. Not only has COVID-19 caused delays in deliveries and labor shortages, but this has happened during a spike in electronic sales, as many people are working from home. PCs, laptops, and other accessories are in high demand. “The nation’s limited supply of semiconductors went largely to those devices at the expense of automobiles, the [Semiconductor Industry Association] has said.”
The effects of limited semiconductors in the automobile industry are disastrous. According to a report from the European Automobile Manufacturers’ Association, “new passenger car registrations in the European Union dropped by 30% in October.” The car market is down -35.7% in Italy, -34.9% in Germany, -30.7% in France, and -20.5% in Spain. With production lines getting back on their feet after the initial wave of COVID-19, semiconductors will continue to be in high demand.
Some blame the Biden Administration’s policies for incentivizing workers to remain at home and the rising inflation for the labor shortage. The lack of truck drivers in Europe and the U.S. is causing huge delays in the transportation of goods. Chris Spear, President, and CEO of the American Trucking Associations told CNN that there was a shortage of over 80,000 drivers in the U.S., a record high.
In early October, The Guardian also interviewed Flavio Romero Macau, “a supply chain expert at Edith Cowan University in Western Australia.” “‘Consumers are crazy to buy things because the world is awash with dollars from government stimulus, higher savings, and pent-up demand. PlayStations, laptops, phones, gym equipment – you name it, people are trying to buy it,’ he says.’ ” He summarizes by drawing a correlation between high demand and low supply, which causes inflation.
How long can we expect these shortages to last? According to Hsieh Huey-Chuan, the president of Evergreen Marine Corp. in Taiwan, “Port congestion and a shortage of container shipping capacity may last into the fourth quarter or even mid-2022.” Moody Analytics warned back in early October that things “will get worse before they get better,” as they cited that 77% “of ports have experienced above-average wait times this year.” Hopefully, on the global scale, other countries can join the Biden Administration’s fight for a more stable economy. However, speech and action are two very different things. As companies examine their objectives, they must find effective ways to cut costs and meet the consumer demand, though because of panic buying during the pandemic’s initial months, it is tricky to determine the actual level of demand for products. Many are optimistic that supply chain issues will be resolved by the end of next year. If the global economy is to restabilize, countries around the world will have to make it happen. Everyone wants one-day shipping.
Euronews, “Car Sales in Europe Hit Record Low Due to Microchips Shortage,” Euronews, last modified November 18, 2021, https://www.euronews.com/2021/11/18/car-sales-in-europe-hit-record-low-due-to-global-microchip-shortage.
Grace Kay, “Moody’s Warns of ‘Dark Clouds Ahead’ for the Global Supply Chain as 77% of the World’s Largest Ports Face Backlogs,” Business Insider (Business Insider, October 14, 2021), last modified October 14, 2021, https://www.businessinsider.com/global-supply-chain-crisis-ports-face-record-delays-2021-10?r=US&IR=T.
Kathryn Underwood, “Why Are Supplies Delayed? Supply Chain Issues, Explained,” Market Realist (Market Realist, October 13, 2021), last modified October 13, 2021, https://marketrealist.com/p/supply-chain-issues-explained/.
Khristopher J. Brooks, “Starved for Semiconductors, Ford Strikes Deal for More Chips,” MSN (CBS News, November 18, 2021), last modified November 18, 2021, https://www.msn.com/en-us/money/companies/starved-for-semiconductors-ford-strikes-deal-for-more-chips/ar-AAQSiQS.
Laura He, “A Huge Backlog at China’s Ports Could Spoil Your Holiday Shopping This Year,” CNN (Cable News Network, June 18, 2021), last modified June 18, 2021, https://www.cnn.com/2021/06/17/business/china-ports-global-supply-chain-intl-hnk/index.html.
Martin Farrer , “’A Perfect Storm’: Supply Chain Crisis Could Blow World Economy off Course,” The Guardian (Guardian News and Media, October 2, 2021), last modified October 2, 2021, https://www.theguardian.com/business/2021/oct/02/supply-chain-world-economy-energy-labour-transport-covid.
Matt Egan, “The Global Supply Chain Nightmare Is about to Get Worse,” CNN (Cable News Network, October 13, 2021), last modified October 13, 2021, https://www.cnn.com/2021/10/12/business/global-supply-chain-nightmare/index.html.
Statements and Releases, “Fact Sheet: Summit on Global Supply Chain Resilience to Address near-Term Bottlenecks and Tackle Long-Term Challenges,” The White House (The United States Government, October 31, 2021), last modified October 31, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/10/31/fact-sheet-summit-on-global-supply-chain-resilience-to-address-near-term-bottlenecks-and-tackle-long-term-challenges/.
Vanessa Yurkevich, “Wanted: 80,000 Truck Drivers to Help Fix the Supply Chain,” CNN (Cable News Network, October 19, 2021), last modified October 19, 2021, https://edition.cnn.com/2021/10/19/economy/trucking-short-drivers/index.html.