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On any given day, reports The Wall Street Journal on 7 September, forty or more cargo ships lie at anchor off the California coast, awaiting access to the ports of Los Angeles and Long Beach. This is indicative of how the COVID War continues to play havoc with worldwide supply chains; before COVID-19, it would be unusual for even one ship to be kept waiting.
The glut at shipping ports is only part of the problem. Warehouses are backed up and shipping by rail and truck is also snarled, in part because of shortages of truck drivers and warehouse workers. And there’s no end in sight, at least not any time soon; the bottlenecks are forecast to continue well into 2022, as inventories are rebuilt. See Trends Journal “SUPPLY CHAIN DROUGHT,” 11 May 2021.
The WSJ reports that the number of imported shipping containers handled by U.S. ports in August was some 2.37 million, the largest monthly number since 2002. And 2021’s total is expected to be 25.9 million containers, surpassing 2020’s record of 22 million. There’s even a worldwide shortage of shipping containers, and oceangoing freight costs have risen. See “SHIPPER BOOKS TENFOLD INCREASE IN NET PROFITS,” 17 August 2021.
And as winter approaches, the situation is expected to only get worse. Traditionally there’s been a lull in shipping around February, when Chinese factories shut down for the Lunar New Year, but this time around there’s not likely to be much relief. How vital China is in the grand scheme of global supply chains was addressed in “CORONAVIRUS DISRUPTS SUPPLY CHAINS,” 18 February 2020.
TREND FORECAST: Although the WSJ article doesn’t explain it, this logistical nightmare is the result of the COVID War causing dramatic shifts in demand for certain items. This has led to changes in the numbers and variety of products that retailers offer and keep on hand, shortages of certain products, and even rationing.
In short, the COVID War has exposed flaws in supply chains (the systems that move products from suppliers to consumers) that, under normal circumstances, would have had enough of what logisticians call “resilience” to handle a range of fluctuations in supply and demand.
As Trends Journal stated in “SUPPLY CHAIN DISRUPTIONS = INFLATION” (6 Oct 2020), the international lockdowns have disrupted the flow of raw materials, component parts and finished goods.
And what that article’s TRENDPOST noted in 2020 is every bit as true today: “Prices generally rise for two reasons: the creation of additional currency or curtailment in the supply of goods and services. We are currently experiencing both: an increase in the currency supply as well as a reduction in goods and services… the result of which will be an increase in prices—inflation.”