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Are You Getting Nervous? Supply Chain Is the Next Shoe
COVID was a life-changing event for the world and it has yet to be solved or rectified. Its origin was somewhere in China, maybe Wuhan (we know that is the origin). We’ve been on high alert for so long, and I’m tired of it. The infection curve went up, came down, went up again, and now it’s leveling off. So can we calm down yet? No, because it seems the next crisis is unfolding and this is in our supply chain. Several have posted what they are seeing, shortages, longer wait times, costs going up. I am getting nervous again when I read sentences like this, from an article called “Inside America’s Broken Supply Chain”:
This month, the median cost of shipping a standard rectangular metal container from China to the West Coast of the United States hit a record $20,586, almost twice what it cost in July, which was twice what it cost in January, according to the Freightos index. Essential freight-handling equipment too often is not where it’s needed, and when it is, there aren’t enough truckers or warehouse workers to operate it.
“It’s going to get worse again before it gets better,” said Brian Bourke, chief growth officer at SEKO Logistics. “Global supply chains are not built for this. Everything is breaking down.” (bold and underline is my addition)
Ports in California are clogged. New Jersey and New York, as well as in Texas and Georgia, are also seeing record pileups.
I am nervous because we have a president who assures us in a speech yesterday that the economy and jobs are growing and on track. What universe is he operating from? We have a vice president who is visiting a children’s school and skips a major border meeting with Mexico. So we have multiple, major crises and those in charge who could be working on these problems, aren’t.
I’m nervous because our current president stands before a fake White House room setting with the slogan Build Back Better on a board in the background (virtue-signaling to Klaus that America is on track). Several world leaders are using this same slogan including Trudeau, Boris Johnson, even Prince Charles, etc.).
Isn’t that a coincidence? Everything that we once counted on, like supply chains are screeching to a halt. Hmmm … interesting. Perfect timing to usher in the ‘Build Back Better,’ a.k.a., Green New Deal on steroids, and goodbye free-market capitalism. Kick the oil and gas industry in the rear just when we need transportation and fuel costs down. Also, the cargo return costs are being greatly jacked up in (guess where?) China. We’re sending sometimes empty cargo ships to China, which means we’re not exporting, just importing, and paying their jacked-up freight costs. China is once again at the forefront because we’re too dependent on them for too many things (and they know it).
Remember “you will own nothing and be happy,” Klaus says. You will no longer buy cars, you will rent, you will, you will, you will… Is this another lever being pulled to usher in The Great Reset? It seems we’re not going back to normal after the pandemic. From Klaus’s dream last night: “Just let the systems fail. Then we have to implement X, Y, and Z – this is too easy!” Good thing there are only two shoes that can drop, unless these people have more shocks in store.
Published in General
For a few decades, before retirement, I taught Supply Chain Management to undergrad and MBA or MS students. When I started teaching in the 1980s US manufacturers of all sorts of products were busy adopting Japanese management techniques. (Side note: the Japanese imported Americans in their hard times in the 1940s and 1950s to learn how to do quality control well, but US corporations didn’t pay any attention until they were getting out-competed by Japan in the 1960s and 1970s.)
Toyota essentially invented or perfected most of the techniques that are more or less under the umbrella of Lean Manufacturing, which includes JIT (just in time). JIT was, for Toyota, Honda, etc. a local operation; they would have suppliers in the same city or nearby, who would make up to several deliveries each day. They were not usually in a different country at the other end of a sea voyage.
When Honda built its first assembly plant in Marysville, Ohio they also had their suppliers build car parts factories in Maryville. If those suppliers are still in Marysville (I don’t whether they are or not) it would be a classic Japanese JIT system.
The invention of the sea shipping container and the ships and docks to support them transformed the world economy (see The Box That Changed the World) because it allowed for JIT from one country to another. Ships could be staged across the Pacific to allow for frequent deliveries. The Toyota NUMMI factory in California was one of the first; they delivered complete Corolla engines made in Japan to their production line in Fremont, CA via the port in Oakland.
Apple has leaned on this technique very profitably, getting iPhones and other products assembled in China and supplying demand in JIT increments to the US market. Phones are small enough for air shipment, of course, but that’s costly, too.
I used to make a couple of points in my lecture on JIT across the Pacific:
I kind of hope some of my students remember hearing those points. I fear we are about to find out just how big the impact of a broken shipping system will be.
Your points A and B are coming to fruition – and we’ve known about it for years. I remember decades ago seeing our military leadership on public TV talk shows talking about how we get military parts from China – inferior, bolts that go into planes, and other sensitive parts and were failing. There was also a security risk. You should be summoned to a round table now – they need to be retaught, but it may be too late! Failing drywall and other products, tainted toothpaste and pet food – we haven’t learned much.
Since Democrats won’t do anything about these various crises, it falls to the Republicans. Why should it matter that they’re the minority in the House? They’re still supposed to do their part in leading the country. “Oh, we don’t control the House” is a pitiful excuse. If our current President is too addle-brained or unwilling to rescue this country from the mess his party has created, we should be seeing Republicans stepping up to do the job as much as they are able. Either get things moving or bring to heel those who stand in our way. LEAD, DAMMIT!
The only actual leadership in this country right now seems to be coming from the Governor of Florida.
With a little help from Texas. Speaking of which, wouldn’t that make a great slate for 2024: DeSantis/Abbott? Except that, in today’s climate, one of them would have to come out as trans and the other as…
How many shocks to the system can people take? They are trying to wear us down to make it easier for us to accept the insane plans that they are trying to implement. Yes – I live in Florida and he is a great governor. They’re already running smear ads on him to dampen his chances for any re-election. He would be a good president.
And, where leadership is concerned, where are the mega-corporations to sound the alarm? Perhaps I’ve missed it but I’ve seen trucking and supply chain gurus talking about the situation, but where are the CEOs of, say, Walmart.(just in time inventory!) or Kroger or Costco or . . . One wonders if they’re too busy with diversity management or too woke to take on the Administration.
Seems we’re beyond the point of a soft landing. Just hoping that the debris field is not too large.
They run this administration. Why do you think they’re just fine with things like vaccine mandates for all businesses or fines if they refuse? Why do you think they’re always in favor of stricter regulations? Because they’re large enough to take the hits, while it destroys their competition.
Who will supply chain fractures hurt more? The smaller companies or the giant international mega-corporations?
The last sentence rings true. However, at some point revenues suffer, impacting their compensation. But I’m good with the fact that they’re tools when they should be the most vocal.
But the mega-corporations are also the ones the can extract bailouts and such, which the smaller competitors couldn’t even if they still existed.
Their revenues suffer only if they are also not in some of the monetary pay dirt COVID policies are providing.
Rumors circulate that monies are awaiting whatever companies make themselves available to successfully bid on the millions of plastic enclosures needed to house our children in classrooms across America. On the contact tracing programs – a program that will rival the Census project, except it will be on going, 24/7, 52 weeks of the year for at least another 4 years.
The contact tracing program itself is not a rumor. people are being hired for it.
And it should please everyone here that the Clinton Global Charity Foundation will hold the power behind the thrones of this endeavor. Back in Spring of 2020, Bill Clinton modestly proclaimed this program to be the most ambitious health program the world has ever seen undertaken anywhere. (Of course it is also the most absurd project ever, as how does continually monitoring healthy asymptomatic people benefit anyone? And when an asymptomatic individual tests positive, they will be quarantined. So again income losses, and even job losses will slam the already beleagured middle class person.)
Plus think of all the slush funds available for those governors who embrace this program?
Rumors are circulating that this monetary windfall for companies involved in this project or in the CDC’s “Green Zones” could be as much as fifty trillion dollars allocated over the next four years.
And who pays for those bailouts?
Why, that would be us.
Certainly. I’ve had the displeasure of encountering them. They seemed to know far more about me than I was comfortable with. HIPAA no longer means anything. Medical history is just handed over to Contact Tracers, who, as you say, are just random people hired by the states who need neither training nor expertise.
What was your interaction with them?
Kids got COVID after a church trip. Contact tracer from who knows where called us to explain about how we all had to quarantine, knew that my wife and I had already had COVID last year, knew that we had not been vaccinated, insisted that natural immunity didn’t count, only vaccination, which would have gotten us out of COVID jail quickly, . . . knew all about the church trip, even knew that I worked at the church and suggested that I use my position at church to organize a vaccination clinic.
It was creepy. I never authorized that my doctor could share all my personal information with a creepy contact tracer, . . . but there it was.
The contact tracer claimed she was calling from the Madison health department, but then quickly corrected herself to say she was calling from the Eau Claire health department, but she couldn’t even pronounce Eau Claire correctly, so who knows where she was really calling from?
I would put odds on either Bombay, or Manila.
I see stories about shipping companies going out of business and ship’s crews left stranded by owners and then turn the page and there are stories about shipping costs going up.
What’s going on is that Hayek was right yet again: High times in shipping caused mal-investment. There was a glut that that led to a bust and consolidation. Now, six big shipping companies are left.
As prices rise more ships will be recruited and the shortage eliminated. As ships back up at ports other solutions will be found. The only thing that could screw this up is the governments getting involved.
As for the ship owners who caused this mess, they are small fry almost entirely in third world countries who have already paid the ultimate penalty provided by capitalism; they’ve lost their entire investment.
The Caspian Sea where she switches shifts with the Dell Customer Support call center.
Too late, they already are. Have been for years, really. That could even be a big cause behind what’s happening.
Well. So the contact tracer lady might easily be related to John Bartlett, not a Pah-kee-stanee, who used to call us all the time to ask if my husband or I couldn’t allow him remote access to our computer so he could install the latest version of Windows on our machines. He cheerfully pointed out he could do this free of charge. Who knew you only need to issue a couple of computer instructions and a stranger from another land could glom on to all your banking, tax records and what not – for free!
In any event, your experience was creepy. Unfortunately, a whole lot of other people might be experiencing this sort of thing before the COVID shuffle is over. (To be replaced by the ebola two step, maybe?)
The Federal Reserve helps big companies by injecting money into the system that tends to land in the stock market. Stock options are where the real compensation is !
Regulatory Capture.
Look. It. Up.
I’m not sure what Sam’s Club is doing right. I made a $300 order two days ago ( little household things I don’t want to run out of – freezer bags, batteries , canned tomatoes, bags of Splenda, plastic trash bags, napkins). Anyway, some very heavy items – I don’t know when they’re going to start charging shipping. And we received all of it today, delivered by Fedex. I think I should order some more stuff. We already have a year’s supply of TP, paper towels and coffee.
Yes I’m sometimes surprised by what FedEx does too. I just won a nice, fairly large telescope on an auction site, and FedEx shipping to me is less than $13! I’m sure they give the seller a big discount since it’s a charity, and it isn’t a very long trip – within the state, really – but still, when was the last time FedEx charged only $13 for ANYTHING?
I got a smallish air compressor last month from Harbor Freight, and their “shipping” – once again using FedEx – was only $6.99! Maybe they really can make it up in volume, somehow…
But that said, I try to get as much as I can from Family Dollar because they’re local and if THEY went away I’d REALLY be screwed.
Mrs. Most Interesting Man says she’s coming by your house. Do you have any coffee?
The distortions from central bankers guessing at what they should do is a comprehensive disaster. Now the financial system is holding the economy hostage.
People go on and on about Ronald Reagan. It would have helped if they would have followed through on his desire of getting rid of the Fed dual mandate. Focus only on inflation or not of the color pieces of paper we use for money.
The whole Reagan project was over once 41 stopped cooperating with it.
This is very good on fossil fuels supply chains and government environmental policy. Six minutes.
This is interesting to think about. If you can’t get commodities the old fashion way, they will try to force it on the futures exchange.
That is unbelievable Drew! Wow!! There is also on record that many COVID tests produce a false-positive so we’re not sure who has what. It could be the flu. But tracing you at all is just wrong. They are trying to impose all these conditions on workers and companies to force injections and tracing or lose your employment or military service? This has to be part of the bottlenecking for lack of dock workers, delivery drivers etc. Not to mention the constant employment signs in windows for help wanted – not enough people to even stock shelves.
There is a lack of materials to build furniture, paper shortages to even create boxes to ship – it’s having a domino effect and the leadership in this country isn’t making it a priority – only forced injections and tracing……….