When I was a kid growing up, nobody worried about supply chains. That’s because just about everything was made in the good old USA. Of course that meant there weren’t fruits of all kinds and varieties available year round in the grocery stores or many of the other shopping conveniences that we now take for granted but folks back then didn’t know any better. Things were made in America by Americans, shipped to and delivered by Americans and that was the end of that story.
Back in my day growing up in Minnesota, the Christmas season began on the day after Thanksgiving. That’s when all of the festive decorations went up, the Salvation Army Band started to play Christmas tunes on the streets of St. Paul, Dayton’s (now Macy’s) in Minneapolis devoted an entire floor to Christmas and Santa (not unlike the department store scene in the movie Elf) and holiday cheer was in the air. Christmas shopping consisted of paging through the Montgomery Wards and Sears catalogues for things that one sent away for (somewhere else in America of course) and those things came whenever they came; there were no guarantees, none of this two-day, overnight or even same day delivery business. Sometimes things weren’t even delivered to your house but rather to the downtown store’s catalogue department where you had to drive and pick it up.
Most of Christmas shopping then consisted of in-person perusing of the goods on the physical store shelf. If it wasn’t there, they didn’t have it and you couldn’t get it. People shopped early so they could get the best selection; in other words before Christmas Eve, which is when a lot of people did their gift shopping back then, including me a time or two. Much of those “olden golden days” customs and practices are now gone thanks to Internet shopping and the global supply chain.
In the 1990’s with the advent of the North American Free Trade Agreement (NAFTA) and the opening of global trade generally, American manufacturing and mercantile life changed dramatically. I used to teach high school and one of the things we discussed was what does it mean to be “American made” as opposed to “Made in America”? The Ford Tempo, an American car, used to be assembled in plants in Mexico by Mexicans while the BMW, a German car, was assembled in South Carolina by Americans. Which was the “American” car; one or the other, both or neither?
When I was a kid nothing was made in China, at least nothing Americans could buy. We didn’t even recognize the existence of Communist China until 1972. “Made in Japan” was shorthand for products that were cheap, flimsy and soon to break. Now manufacturers get components from all over the world in a global supply chain that usually functions smoothly and well. However, we saw earlier this year that a container ship named Ever Given stuck in the Suez Canal was partially responsible for worldwide shortages of goods because of the bottleneck it presented to other ships’ navigation through the canal. As of this writing, 80 container ships with $25 billion worth of cargo are waiting off the California coast to dock and unload. Officials in Florida suggested those ships make the nine-day journey from the West Coast through the Panama Canal and unload in Florida instead, in order to alleviate the crushing backlog and wait times. The International Maritime Organization reports that approximately 1000 crew members are stranded on container ships at sea because the vessels owners went out of business mid voyage. The cargo on those ships doesn’t belong to the shippers but without funds to pay employees and docking charges, what’s the alternative to sitting in the middle of the ocean? Meanwhile the stuff you ordered sits in limbo, undelivered.
According to the US trade figures; about 90% of all consumer goods are shipped across the world’s oceans with $1 trillion worth coming from Asia to the United States. It can now cost as much as $25,000 to send a single container on a ship from China to the US, up from the typical fee of $2500. Why the crisis and why now?
There are several reasons why we’re in this predicament. First, we don’t control our own supply chain anymore. That means when there is a natural disaster, a coup or a strike etc. somewhere else in the world we feel the ripple effect here. Covid-19 is a worldwide pandemic, which means that illnesses and deaths of employees with resulting lockdowns etc. in foreign countries as well as within the USA have impacted productivity and efficiency.
Consumers are also to blame. We are used to clicking and buying now. We are purchasing more than we ever have. There are also more consumers worldwide with more disposable income than at any other time in world history. US retail sales are 5% higher than last year and 17% higher than in 2019 so in the best of times that increased demand would mean higher prices and slower deliveries even without a global pandemic and supply chain problems.
On a related note, customers are also demanding speedier deliveries, which means a larger demand for containers to get more goods here faster. Those additional containers may not physically exist. Even if they did exist they still have to be shipped on ships, which don’t necessarily have the capacity to transport any more containers than they already are. Those ships have to berth at docks that absolutely can’t accommodate the increased shipping in a timely manner and then those products have to be loaded onto trucks, which may or may not be available, to move the goods once they hit port. That, coupled with Covid-19 and the aforementioned increased demand, explains the global supply chain crisis in a nutshell.
The upshot of all this is if you haven’t already ordered your Christmas items a few weeks ago you’re probably out of luck for this Christmas due to demand and supply chain issues. The silver lining is there are plenty of local merchants with a fine selection of quality goods who would love to help to supply the items on your holiday list and make your Christmas wishes come true.