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Supply chain delays won’t be easily fixed and trouble will continue into next year

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Unprecedented supply chain disruptions will continue into next year, an IHS Markit analysis found. Freight prices are spiking to record levels, ships have been idled and ports are clogged, as a result of the global disruptions. Delays and shortages are causing one common problem globally – inflation.

At the heart of the shipping problem are more than 20 million metal containers. They carry about half of  world trade – everything from electronic goods and furniture to auto parts and seafood. Over the last three decades, the global system has become much more complex and highly interdependent. Over this time China has emerged as the linchpin of the whole system. It is either the source of manufactured goods or the assembler of components shipped in from other Asian countries. Today, 42% of all the containers arriving in the U.S. come from China, which is home of seven of the 10 largest container ports in the world.

The disruption began last year when Americans and Europeans were locked down in their homes.  No longer able to spend money on services, but with household savings surging, they spent instead on household improvement and electronic goods, much of it ordered online. The shipping companies and ports were not equipped to deal with the flood of containers.  The situation was made more difficult by the shortage of workers owing to Covid.   That is when ports began to clog up.

SourceCNBC

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