Why this is happening
Over the past two years, the pandemic has affected nearly every industry and the global supply chain. This has affected manufacturing, transportation, and logistics, which are key to modern shopping and moving goods from manufacturers to consumers. This has led to scarcity that has led to the increase of commodities prices. This disruption goes back to 2019 at the beginning of the pandemic when factories in different parts of the world, such as China, Taiwan, and South Korea, were closed down to minimize infections.
The pandemic also affected operations in European and American manufacturing hubs such as Germany and the US, respectively, where the pandemic hit hard, forcing factories to shut down or reduce production due to restrictions on person-to-person interactions and lockdowns. In response to the scarcity of labor in manufacturing companies, shippers cut their schedules in anticipation of a drop in demand for goods across the globe. This became a terrible mistake. Although the demand for some goods such as restaurant services and tour services tanked, some services or products saw an increase in demand. Things such as printers, gym equipment and video game consoles’ demand rose as people sought equipment for their new working from home life.
Although factories did their best to produce enough products for the market, supply chain issues made access to components difficult. For example, computers assembled in China require chips from Taiwan or Malaysia and specialized chemicals from Europe. The surge in demand for other items clogged the supply chain, which suffered from an acute shortage of employees to offer services. The already finished products piled up in warehouses and ports were clogged because of shipping difficulties.
Since the shipping industry is a key component in the supply chain that helps move millions of items and containers worldwide each day, it is a major enabler of trade. Therefore, problems in the industry can cause major issues. A recent problem at Suez Canal is a key example of how millions of dollars can be lost in a day due to a problem in the shipping of items. Therefore, any problem in the shipping line, such as the one caused by the pandemic, can be catastrophic to the customers and shipping companies, who are forced to wait longer before products can be delivered to their destinations.
In North America and Europe, the heavy influx of containers arriving after the hitches in the supply chain overwhelmed the ability of the ports. For instance, ports like Oakland and Los Angeles suffered the most as dozens of ships were forced to wait for days before they could offload their luggage. This lack of efficiency is costly to shippers and customers who want to use their products as soon as possible. Part of the problem was caused by dockworkers who were stuck in quarantine. This meant that there was no availability of people to unload goods, further causing more problems in the shipping process. With Suez Canal, a major route for shipping goods to Europe and other regions, closed, the situation was worsened.