Light At The End Of The Tunnel?

 

Courtesy of U.S.C.G.

We are awash in shipping containers, with railyards, rail lines, trucking companies, ports, harbors, etc. 

How did we get here and when will it end?

Covid did create a disruption and one the just-in-time inventory management system has struggled to adjust. It has taken about 35 years to develop what was a mostly very efficient, mostly smooth movement of goods. As this transition took place, the need for massive warehouses was reduced with the reduction of manpower required to keep those warehouses operating. 

As efficiency improved, the requirement for trucking, rails, etc. was also reduced... with the manpower required to maintain and operate. 

That was all and good, until Covid, which not only created shutdowns, uneven distribution, but also a massive shift in consumer spending habits. We had China nearly shutdown, which impacted industries and retailers in the U.S., which may or may not have taken advantage of impending goods shortages, to shutter operations for the good of their employees. This put a lot of stuff in the wrong place.

Then we had the so-called legitimate shutdowns, which were region by region and even county by county. A very uneven shutdown, to say the least. Then there was a very uneven re-opening, with some rushing to re-start, while others resisted these efforts. During all of this, there was a gigantic shift in consumer habits, which accelerated during all the stimulus period.

One only needs to look at the BEA's GDP numbers associated with good and services, and see a dramatic shift to goods, both durable and non-durable, with a sizable reduction in services. Goods have increased about 18% over 1st qtr. 2020, with about half being in 3rd qtr. 2020, holding steady in 4th, then accelerating in the 1st and 2nd quarters of 2021.

In addition, the importation of goods followed a similar pattern, with about a 12% increase over that period. Such surges are difficult to prepare for, in such a short period of time. Essentially... Just-in-time has been erased for the foreseeable future.

Clearly, the system while not broken... is in disarray. There are glimmers of hope going forward. Here are a few articles that seem to be clearing the fog of misinformation, imo.

• Containers Piling Up At U.S. Rail Yards Add to Port Strains
• More truckers won't solve US port congestion, supply chain issues: Harbor Trucking Association CEO
• Rail freight is at the center of the supply chain crisis
• UP metering domestic intermodal out of Chicago, Memphis

Even recognition of TOO many containers (Lot of empties) as a problem and potential action by the State of California... by executive order of the Governor.

Everyone is trying to avoid being the Grinch that stole Christmas. Not to mention it is important to shift blame to the average person for leaving the workforce at this time and proclaim "worker" shortage. 

From the St. Louis FED... THE COVID RETIREMENT BOOM. 

So we made the system more efficient by reducing the workforce and now proclaim we need more workers. 

Good Luck!