What's Going on With Glo...

What's going on with global supply chains? (aka "why are we running out of everthing," "why is shipping so slow," "why are things more expensive"). A link roundup thread: (View Tweet)

1/ The stories that started appearing over the summer about the state of global supply chains have been ramping up, and I thought it would be worth it to collect some of the articles documenting the disruption/catastrophe/reality of it all. (View Tweet)

2/ There have been some good overview pieces on this, like Alana Semuels "Why Is Everything More Expensive Right Now? Let This Stuffed Giraffe Explain" which follows the journey of Jani, a 4-foot plush giraff, through the pandemic-era supply chain. https://t.co/Gn1WTozZKs (View Tweet)

3/ Same goes for Ann Koh's piece, "One Stuck Box of Fertilizer Shows the Global Supply Chain Crisis" which offers an equally interesting (though perhaps less charming) object to follow. https://t.co/eAoZcDnjY8 (View Tweet)

4/ But smaller pieces of the story are everywhere. The New York Times framed the situation as "a painful lesson in how interconnected economies are across vast distances," with "delay and shortages in any one place rippling out nearly everywhere." https://t.co/41usMp8KpM (View Tweet)

5/ They peg the problem to the shipping industry: "For the global economy, shipping is at the center of the explanation for what has gone awry." And it IS the case that shipping is the most proximal cause for supply chain snags. (View Tweet)

6/ While "the normal number of container ships at anchor is between zero and one," this week a high of 56 ships were waiting in California. Capacity is at an all time high, a result of demand, administrative backlogs, and labor shortages. https://t.co/U1PWQXGeU1 (View Tweet)

7/ At the Port of LA average wait time has increased to 8.5 days (was 4.7 in June). Changes in scale over the past decade are compounding the effects. Ships are 2-3x the size of 10 or 15 years ago. They take longer to unload, need more trucks, more trains, and more warehouses. (View Tweet)

8/ Even before the pandemic, labor hadn't scaled the same way. (View Tweet)

9/ For goods coming to the US from China by sea you see an increase in time required from factory to port of 40-50%. The cost for the company shipping that container may be 4-5x as much as it used to be (from a few thousand to $15-16000 a container) https://t.co/jvnAtqNsCA (View Tweet)

10/ This has been building for months now: https://t.co/rMbVbvxcA3 (View Tweet)

11/ While most headlines focused on California, congestion in China is even worse. Stricter COVID protocols for arriving vessels have compounded effects, with delays in bulk carrier processing increasing rates for and adding to general traffic congestion. https://t.co/SM24ZUXJzh (View Tweet)

12/ But while many recent articles focus on shipping, it is important to remember that early in the pandemic we were pretty focused on COVID's impact on production. https://t.co/N2PaP3RIZc (View Tweet)

13/ Not only have these problems not completely disappeared, the current distribution crisis seems to be producing other (differently located) production problems in some industries. (View Tweet)

14/ In the automative industry, for example, shortages have led GM to stop operations in the US (https://t.co/tb8wWeGbXX), just as Toyota has in Japan (https://t.co/7I4RNRNPcT) (View Tweet)

15/ In many respects, the real problem here is uncertainty. After all, logistical time isn't fast, or slow. It doesn't actually matter how long a container ship takes, or how much product is on hand. What matters is that you can predict it. Logistical time is regular, routinzed. (View Tweet)

16/ Almost every supply chain problem can be traced to a failure in prediction. But usually these are isolated, by geography, by sector, and they have (historically) tended to be relatively short-lived. (View Tweet)

17/ Ten years ago disasters like the Thailand floods decimated hard drive manufacturing. Fukushima led to widespread disruptions, what the New York Times headlined as "A Stress Test for the Global Supply Chain." But effects were felt for months, years. https://t.co/0UbyRgwQEl (View Tweet)

18/ Global climate change is sure to increase the frequency of these kinds of disruptions. (View Tweet)

19/ And much of our logistics infrastructure, especially in the US--from ports, to warehouses, to rail and roadways--is simply not prepared. https://t.co/O69MkqF6HS (View Tweet)

20/ It is certainly the case that these earlier supply chain disruptions offer lessons for the pandemic-era supply chain. https://t.co/cIr32af4rd (View Tweet)

21/ Modern supply chains are "lean." Excess is inefficient, and costly. But despite calls to "resiliency," these lean supply chains offer little margin for when things go wrong. As Peter Goodman and Niraj Chokshi put it, "Just In Time is running late." https://t.co/HJXSs4G7ke (View Tweet)

22/ Another way to put this is that the pandemic has "produced" uncertainty across the planet, in nearly every sector, across all available means of production and distribution. It has called into question labor pricing, worker availability, and resource management models. (View Tweet)

23/ It has also led to rapid changes in consumption patterns. If consumers bought the same "stuff" they were often doing so in different ways, through different distribution channels. And that shift has swung back and forth, as Amanda Mull describes: https://t.co/rexJhfa8cb (View Tweet)

24/ The other thing that compounds supply chain disruption is that modern productions are incredibly complex interwoven collections of materials and processes, and that these have become distributed into smaller and smaller pieces spread across the globe. (View Tweet)

25/ Minor disruptions to sources for these components can impact a diverse array of (seemingly) unrelated industries, and the dependencies (especially as we get to deeper tiers of the supply chain) can be surprising. (View Tweet)

26/ Even in critical components, stories often highlight the "little-known" countries and companies that play crucial roles in production, like this article on Malaysia and the semi-conductor supply chain https://t.co/4IoHJnbXNs (View Tweet)

(Reader: Malaysia has been an important location in semiconductor production, in various ways, since the late 1970s) (View Tweet)

27/ We -can- see some shortages that would legitimately be surprising to an informed public, with things like pipette tips. https://t.co/iRHSmHJqIK (View Tweet)

28/ Or with something (seemingly) simple like bicycle production. Under increased consumer demand, producers struggle to assemble the dozens of parts, sourced from a dozen different companies in various countries, necessary for manufacture. https://t.co/RR5TzcUJMX (View Tweet)

29/ So what's being done about it? (View Tweet)

30/ As Harry Dempsey and Thomas Hale report, Chinese manufacturers are now producing record volumes of freight containers. But its more a problem of stuck containers than the raw number in circulation. https://t.co/tNrpUsPoaw (View Tweet)

31/ What makes matters worse is that problems can feed back on themselves. As @jensmithWSJ notes, disruptions are starting to impact other areas of distribution, with heavy-duty truck makers struggling with shortages. https://t.co/d0TgukxCup (View Tweet)

32/ Prices across various supply chain operations are now higher (sometimes much higher). In some areas, there is a run on resources, with firms able to pay the price stockpiling access not only to goods, but distribution channels and stockpiling capabilities. (View Tweet)

33/ Shortage is the name of the game, really. Shortages in labor, coupled to shortages in containers (both shipping containers and trucking trailers), with efforts to supplement the latter stimied by output volume of some critical materials (including semiconductors). (View Tweet)

34/ Shipping congestion is not limited to the sea, it has moved inland, with Union Pacific and BNSF having halted freight shipments in August or metering them to try and get a handle on packed railyards and the containers trapped there. https://t.co/lGVDK4JXOQ (View Tweet)

35/ And if not by train, by truck. There has been a global shortage of truck drivers since the mid-2000s, and the pandemic has exacerbated problems--from a reduction in numbers, to backlogs in regulatory procedures. https://t.co/FSTwP6iPpm (View Tweet)

36/ In the US there have been serious pressures on truckers since deregulation in the 1980s. It is a difficult job, with high turnover and weak benefits. A significant number of large freight truckers are owner-operators, and the pandemic put a lot out of work (and business). (View Tweet)

37/ In 2017, Trip Gabriel put out a series of interviews with truckers who (even then) described feeling like "throwaway people." https://t.co/oHKENDfvba (View Tweet)

38/ For a more complete thread on trucking you can check out @mims https://t.co/MDKnWJtb0U (View Tweet)

39/ Last but not least, even warehouse space is limited, not only because of the pandemic--though the shifts it accelerated in buying habits are a factor--but also because of increased competition (and increasing prices) across the sector. https://t.co/EnNmtE0b2W (View Tweet)