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The Absolute Simplest Explanation for America’s Supply Chain Woes

The Absolute Simplest Explanation for America’s Supply Chain Woes

Supply chain problems have dogged the world economy all through the pandemic. Early on, panic hoarding and problems in particular industries, such as semiconductors, made it impossible for shoppers to get their hands on specific items like Clorox wipes or a new Playstation 5. But those narrower problems have sprawled into a much broader mess. For much of 2021, retailers have been running out of just about everything from diapers to dress shoes. The entire great machine of international logistics, which moves goods from factories in Shenzhen to Walmarts in St. Louis, is jammed up.

While the situation is a pain for consumers and a genuine threat for businesses that stand to lose sales if they can’t stock their shelves, it’s also important to understand that the Great Supply Chain Snarl of 2021 isn’t just a logistical Rubik’s Cube waiting for some inventive solution. Instead it’s better understood, to a large extent, as the downside of the success we’ve had supporting the economy through the pandemic. The core problem is simple: Americans are currently buying a record amount of stuff, and that spending binge is crashing the transport and warehousing network meant to move it all.

“We’ve spent decades optimizing supply chains to carry a very specific amount of cargo during very specific times of the year across very specific modes of transportation,” says Nathan Strang, an expert on ocean trade logistics at the supply chain tech and consulting firm Flexport. “As soon as we exceeded the design capacity of those systems, it broke.”

Even when goods do make it to American shores, they’ve ended up stalled at ports thanks to a “complicated and insidious series of overlapping problems” as the New York Times explains. These individual breakdowns all compound, with one delay cascading into another, and together, they all help explain why you can’t find any Tide at Walgreens, or the Honda CR-V in the color you want.

But if you look at the bigger picture, it becomes clear the problems in the U.S. largely flow from one key factor: We are simply buying an enormous amount of things.

When the pandemic began, and Americans found themselves unable to go out, households suddenly shifted their spending to goods from services. With the money they saved skipping restaurant meals, movie trips, and vacations, people spruced up their living rooms with new couches, built out home offices, and bought themselves some exercise equipment. Stimulus checks helped fuel the shopping as many employees who’d kept their jobs splurged on TVs and cars. Economists widely expected that, as the pandemic faded, Americans would revert back to their older spending patterns. But that hasn’t happened yet, thanks in part to the delta wave. By August, inflation-adjusted spending on goods was up 14.5 percent compared with pre-pandemic, while services were still down more than 2 percent.

Jordan Weissman, Slate.com

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