WASHINGTON — Much of the coronavirus pandemic has been about masks, hospitalizations and vaccinations, but another big part of the story revolves around inflation, worker shortages and empty product shelves. Ultimately, the economic impacts may linger because they are remarkably complicated and defy silver-bullet solutions.
Suddenly, logistics and supply chain management — traditionally mundane topics — are becoming important political issues as the nation longs for things to return to “normal.”
How did it all start? Well, you probably had something to do with it — in fact, we all did. As the country shuttered stores, restaurants and bars 18 months ago, spending habits changed. People went out and traveled less and spent more time on the sofa, inevitably logging time on online shopping sites.
You can see the impact in how people have been spending their money. The U.S. economy has long been, and continues to be, service driven, but since the onset of the pandemic, Americans have rediscovered the joy of spending money on goods.
Personal spending on services was up by about 4 percent in August from August 2019, the last August before the pandemic began, according to the Bureau of Economic Analysis. That’s not a terrible number considering everything the country and the economy have been through.
But personal spending on goods was up by 20 percent in August compared to August of two years ago, according to the Bureau of Economic Analysis. That’s a pretty dramatic spike — about an additional $900 billion spent — that works out to a lot of patio furniture sets, building supplies, electronics and more showing up at U.S. doors.
All of those goods have to come from somewhere, and many of them come from overseas — particularly Asia. Again, comparing 2021 to 2019, you can see how big a difference that has made in terms of trade.
Cargo from Asia increased by 27 percent in the first seven months of the year compared to the first seven months of 2019. That would be a big jump in any industry, but in a business like shipping, which relies on manpower and physical entities like ships, containers, cranes and ports, it has massive real-world impacts.
In the past 18 months, the cost of shipping containers has skyrocketed as demand has increased, resulting in shortages of ships to move goods and space at ports. That’s one reason a record numbers of ships lined up waiting to dock at the ports of Los Angeles and Long Beach, California, at the end of last month — with scores more anchored out in the harbor.
Even when the ships eventually get to dock, there's still the issue of getting their merchandise off and into stores or distribution centers. That often requires trucks, and — comparing the numbers from 2019 to 2021 — there are problems in that part of the supply chain, as well.
Comparing September to September 2019, the Bureau of Labor Statistics found that about 22,000 fewer people are working in truck transportation now than there were pre-pandemic. That may not sound like a lot, but remember — the reduction is coming as there is a big increase in the shipment of goods.
Even adding those 22,000 people back into the industry probably wouldn’t cover what is needed overall. Some driver recruiting firms report that there is 1 qualified truck driver for every 9 job listings, according to Forbes.
Essentially, the big increase in orders for goods has meant many more tons of cargo are trying to make their way out of crowded ports both overseas and into the U.S. And once the products arrive here and are unloaded, there aren't enough trucks to move everything.
One net effect: Things are moving much more slowly.
Comparing September to September 2019, the firm Freightos found that the average time it takes a product to come from China to its final destination in the U.S. by ocean has climbed by 83 percent, from 40 days in 2019 to 73 days this year.
In short, the changing consumer habits that have come with the coronavirus have led to a supply chain system full of chokepoints and increased costs all the way through, from workers to cargo containers to shipping space to truck drivers. And all of that is making some products scarcer and cost more.
It matters on the political front because the shortages and the increased prices have voters on edge.
What voters want sounds simple enough: a return to normal. But when you step back and look at the problem, “simple” is not the word that comes to mind, “normal” feels like a long way off, and 2022 is approaching fast.
