![]() Governments around the world levied embargos on Russian oil, resulting in increased costs for the remaining available fuel for purchase. The Russia invasion of Ukraine also increased the cost of shipping freight. As various Chinese cities emerge from lockdown, such as China’s tech hub Shenzhen (which exited lockdown earlier this year), pent-up cargo has entered supply chain routes, exacerbating the transportation issues and leaving the question as to whether the transportation will be available to move the goods as quickly as needed. China reacted to COVID-19 with strict lockdowns that shut down entire cities, including their factories. Chinese Factory Closures and Re-Openings.16 In addition, shipping container shortages prevented some companies who had product available from shipping it. Consolidations and bankruptcies in the shipping industry made it easier for shippers to increase prices dramatically. These alliances currently control 95% of trans-Pacific routes. Between 20, three shipping alliances increased their share of the shipping container market from 29% to 80%. According to the American Trucking Association, in 2021, trucking companies suffered a shortage of more than 80,000 drivers. 12 As the pandemic spread, the shortage of employees due to sickness and quarantines 13 piled atop a recent wave of retirements and attrition, 14 thereby exacerbating the supply chain transportation crisis in the United States. For example, in 2019 (pre-pandemic), thousands of truck drivers lost their jobs, and the $800 billion trucking industry dipped into a recession. 11 The trucking industry is highly cyclical in nature. The trucking industry has long been plagued by high turnover rates, an aging workforce, and drivers unsatisfied with the long hours away from home and uncomfortable job conditions. 10 The result of this increased ordering of goods from both the consumer and the commercial sides overwhelmed an already fragile supply chain. Eyeing their depleted inventory levels, these companies began ordering more goods to have a bigger buffer stock. 9 On the commercial side, companies veered away from using just-in-time inventory management due to the delays and inability to get resources during government-imposed COVID-19 restrictions. 8 Consumer spending on durable goods rose 30.8% from February 2020 through April 2021. 7 The appetite for products increased further as the labor force transitioned to work-from-home and spent more on new home offices and improving the home environment. Consumer demand for goods skyrocketed as circumstances required consumers to reduce spending on vacationing and eating out at restaurants, resulting in more disposable income for making purchases of goods. ![]()
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