By NICHOLAS MOORE
Business Manager
In recent events, it is not uncommon to see “We are out of the following items” at dining facilities on and off-campus, as well as Sold Out signs for various in-demand products or reselling sought-after items for an enormous profit margin on third-party markets. As infuriating as this is, unfortunately, it is a problem that will linger for a while longer. A pandemic coupled with labor and economic burdens has created a perfect storm of conditions leading to what many consider a Global Supply Chain “Crisis.” There’s more to unpack in a discussion about the global supply chain than one article can cover, but to briefly cover the critical points of this ongoing issue, there’s:
How did this happen?
What does this mean for the foreseeable future?
How can the global economy recover from this mess?
How did this happen?
Quite a few factors fell into place, even during the beginning stages of the pandemic. However, it must be stressed, most of the following factors stated are related to the pandemic but are somewhat specific in their impact on the American economy and are symptoms (economically speaking) of the pandemic.
When it comes to products developed globally, the initial issue was Chinese production plants shutting down or delaying production due to the initial outbreak of COVID in mainland China. Shutdowns led to lower quantities of products shipping worldwide.
When products ship from, for example, China to America, understaffed ports unloading cargo ships were under buckling right before COVID and only became worse once a shockwave from COVID created more significant problems for the American supply chain specifically. Shipping containers started to pile up at ports, with higher unload times, causing products to sit on docks for a longer duration. This, combined with a lack of warehouse workers and truck drivers to get products to intermediate or endpoints, has played a considerable role in products being unavailable on store shelves or consumables not reaching their final locations on time. The ongoing labor shortage America is experiencing results primarily from a lack of high pay positions. However, the need for warehouse workers has led to companies providing incentives such as paying for college tuition.
In addition, the BLS (Bureau of Labor Statistics) has shown that there has been a dramatic increase in labor positions fulfilled since a sharp drop in August (1.464 million to 1.499 million in October). While this shows that the incentives are working to some degree, temporary perks from warehouse/truck driving positions may not suffice in the long run and are part of a bigger overarching problem of wage fairness for essential jobs. How the wage issue resolves will direct how America recovers from supply issues where products are stagnated and do not reach their endpoints.
What does this mean for the foreseeable future?
Many people, especially us underfunded college students, are going to despise this point. Outside of high-demand products being harder to get, one of the most significant issues with a supply chain crisis, in general, is price increases for many items. The reason why this happens follows simple economics, an increase in demand and a reduction in supply leads to a higher “equilibrium price,” or where a willing buyer and willing seller agree to exchange items price-wise. For consumers, this generally leads to companies raising prices because costs may also increase for their operations.
Another “indirect” price increase that gives many tech enthusiasts headaches is individuals taking advantage of reduced demand and “price scalping.” Price scalping is bulk buying products from online shopping sites and reselling on third-party markets for a much higher price to profit off desperate buyers caving paying the premium for sold-out items. While this practice is not new, supply shortages have made it noticeably more common for sectors with incredibly high demand, such as gaming devices, automotive items, and even cleaning supplies, to be sold out via primary market methods relisted for higher prices elsewhere.
The biggest “given” issue is that the supply of items overall will be spotty for the foreseeable future. As alluded to earlier, this is evident from places as close to us as students as the campus Starbucks or Camelot Grill, all the way to significant retailers having empty shelves for various products with no estimated time of restocking those items. The only way this can quell is for both the global supply chain and the American supply freight/shipping issues to be resolved, both the core issues before the pandemic and the added issues the pandemic brought to both sectors.
How can the global economy recover from this mess?
This, of the three points, is the most speculative and difficult to answer. While alluding to how the American economy can fix the current issues briefly, the global supply chain has many more moving parts to factor. Globalism has led to richer countries outsourcing labor to other countries to offset costs for production, but disruptions in supplies reaching these facilities, inability for work to occur because of the pandemic, and the difficulty of restarting after shutting down facilities temporarily lead to ripple effects across all direct and indirectly impacted countries.
The “how” will have to play out, but what is somewhat predictable could be the when. To everything I have seen, the best estimation to being as close to normalcy before 2020 depends on the following factors: How quickly can the world finally deal with COVID, can freight shipping resume uninterrupted and unloading at countries not take weeks, and can America recover once the global economy starts to show signs of recovery and keep up with the demand internally in the country.
All in all, the pandemic and a buckling labor force for the freight/transportation sector have, and will continue to provide, hardships when it comes to companies purchasing supplies and maintaining inventory in pre-pandemic ways. From unavailable products, to price scalping, to prices for available products steadily rising and a lack of enough people to work in these industries, the question of when can purchasing products go back to normal seems to continue to extend as the current global issues persist, and as America’s problems continue to compound on top of each other and create further difficulties for returning to pre-pandemic purchasing.
