How COVID Caused The Current Economic Shortages, And How The Failure Of Supply Chains Exacerbated Them
Greg Bernier, June 15, 2021
Currently, shortages of all sorts of different supplies, ranging from rare earth metals in semiconductors to the wood used to build homes, are omnipresent in the current economic climate. COVID has been claimed to cause all of these issues in our current situation, but contrary to popular belief, it is not the reason why the issues of today have been exacerbated to such an insane degree. While COVID cases have been dropping rapidly in the United States as more and more individuals are vaccinated, the same cannot be said for other countries, and as a result, in an increasingly global supply chain, the economy has been ground to a standstill.
The vast majority of the world’s current cargo comes through seaports on large container ships. The reasoning for this is quite easy — most of the world’s cargo, normally, is not highly time-sensitive, and in a container ship, they can be packaged in large quantities and shipped for incredibly low prices, making it easier for companies to focus resources on other areas of the business. However, this has resulted in a heavy reliance on the usage of ships to transport goods, and in a COVID age with fewer workers, fewer goods being produced in countries under lockdown, and with larger trade disparities, the global supply chain, with a heavy reliance on cargo ships, began to fail.
In the port of Los Angeles, for instance, more than 25 ships were anchored outside of the port back in March 2021. Under normal circumstances, only about 2 or 3 ships would be anchored outside of the port. The reasoning for this is due to a number of different factors that can contribute to an overall massive problem of economics, logistics, and business. The Port of Los Angeles had way too many empty containers to profitably send back to Asia. This has been due primarily to the fact that disparities in trade between America and Asia have for the past 20 or so years been quite high — with more goods from Asia being shipped to America than American goods shipped to Asia. However, with the margins of shipping companies lower as a result of COVID, and with fewer workers to unload, move, and store the containers, Asian shipping companies cannot send containers back, and thus empty containers collect up in ports like Los Angeles, taking up unnecessary space and causing delays that can last multiple weeks.
Other supply chain issues have also caused this supply to a standstill in the economy, such as the lack of truckers to transport goods, which have also played a role in the lack of movement of goods in the United States. Courier companies such as FedEx and UPS have also seen struggles in the ability to handle the extra demand for these sorts of goods, as e-commerce increased drastically during the pandemic. As a result of the incredible strain put on the economy, as demand for goods exceeds the supply necessary to transport them, prices for goods have risen beyond normal levels, triggering other changes in the economy such as increases in minimum wages and labor shortages as employers refuse to adapt. But a solution for this problem is very much possible.
There is no one supply chain. Focusing all of the goods into a single, very streamlined process, while efficient, can have disastrous consequences when that supply chain fails due to often sudden changes in economic functioning. There must be multiple supply chains that distributors can use in case one or more fails. This is something where a service like PartRunner could be very beneficial for the economy. PartRunner and other small courier companies can take weight off of major courier companies by delivering more optimized solutions for individual suppliers, providing on-demand delivery services and logistics solutions, emergency deliveries, and normally scheduled solutions that can integrate perfectly into any business. PartRunner and other small courier companies are much more well designed for the purposes of bringing smaller numbers of goods that would take much more time and cost much more money to deliver through a traditional courier. With changes in the supply chain apparent and the strain on current transportation infrastructure mounting, it is clear that it would be smart for more businesses that could offer them their current services, better suiter for their smaller scale, faster and cheaper than normal couriers.