2021 is shaping up to be a year that will go down in supply chain history as the year of the bullwhip.
Whether you call it backlogs, disruption, or a crisis, the net result is the same: supply chains are not flowing smoothly, and the effects are trickling down to everyone. A bullwhip is the back-end consequence of a problem or mistake such as the ongoing supply chain challenges that have resulted from the Covid-19 pandemic.
“The bullwhip effect related to this will essentially mean that consumers will face certain shortages of products in the near-term and will be paying more for those products in the mid-term,” said Rich Thompson, JLL’s global head of supply chain and logistics solutions.
For many, it was the Ever Given getting stuck in the Suez Canal that first brought the issues to light, but really, if you look back at the beginnings of the pandemic, it was shortages of essentials like toilet paper that were the first harbingers of the coming trouble. Now the scope of disruption is still expanding, and doesn’t seem set to resolve for some time, possibly in the range of years.
Transportation costs are skyrocketing – trucking rates have hit an all-time high in the U.S. and ocean containers have jumped from US$3,000 to $10,000 on trans-Pacific routes. Raw materials like resins and metals have seen astronomical increases as well, with polyethylene climbing at least 30 percent for some Canadian manufacturers, and metals jumping 500 percent for at least one industry.
In this issue we explore the challenges for supply chain operations from a few different angles. Our cover feature, “Container crunch”, looks at how shipping containers have ended up in short supply thanks to delays unloading ships at ports. In our examination of the shortage of semiconductor chips for the automotive industry (“When the chips are down”), we learn that it may not resolve until 2023.
The theme continues in the news section. One story is about the effects on Canadian small businesses – who report that logistics delays and increasing prices for raw materials are increasing costs and forcing them to pass higher prices on to consumers. Another details the trickle-down effects on U.S. logistics costs and trends. Finally, our Trade Update column explains some of the U.S. government’s actions to address these ongoing supply chain challenges.
What is your experience of the long tail of Covid supply chain disruptions? We’d love to hear your perspective.