In 2021, as a consequence of the COVID-19 pandemic, global supply chains and shipments slowed, causing worldwide shortages and affecting consumer patterns. Causes of the economic slowdown included workers becoming sick with COVID-19 as well as mandates and restrictions affecting the availability of staff. In cargo shipping, goods remained at port due to staffing shortages.
The related global chip shortage has contributed to the supply chain crisis, specifically in the automobile and electronics sectors. During the Christmas and holiday season of 2021, an increase in spending in North America, combined with the spread of the Omicron variant of COVID-19, further exacerbated already tight supplies.
Long tail effects of the supply chain crises are contributing to ongoing food security issues related to the pandemic, including the 2022 food crises.
- The supply chains that were disrupted during the COVID-19 pandemic faced huge challenges and struggled to recover. Industries around the world shutdown due to the rapid spread of the virus in 2020.
- There was reduced industrial activity and lower consumer demand. While consumer demand increased quickly when lockdowns were lifted, manufacturers and distributors of goods were stymied by worker shortages and a lack of key components and raw materials. Additional bottlenecks included containers, shipping, trucks, railroads and warehouses.
- Ports around the world were impacted with ports in the United States in particular experiencing blockages as they were overwhelmed with container ships and their cargo.
- The ports of Long Beach and Los Angeles together account for approximately 40% of the shipping containers entering the United States.
- More than three-quarters of the containers leaving Los Angeles were empty in July 2021 whereas about two-thirds of the containers leaving U.S. ports are typically filled with exports. Many of containers were going back empty due to the rush by shippers to bring in imports of back-to-school supplies and fall fashions from Asia.
- This impacted Midwestern farmers and California almond growers who ship to customers overseas. Shipping companies placed a lower priority on products that paid lower shipping rates resulting in various exports being delayed.
- In October, there were a record number of ships at the docks of these two Los Angeles area ports as well a record number of ships waiting for a slip. In early November, more than 100 ships were anchored in San Pedro Bay.
- It was unusual for even one vessel to be waiting offshore before the coronavirus pandemic. In late 2021 and the first month of 2022, container ships have remained at American ports unloading goods for seven days on average, 21 percent higher than at the start of the pandemic.
- The mayhem at ports and shipping yards was a key driver for rising prices together with the market dominance of major companies. In early 2022, politicians and central bankers worked to tame inflation as businesses continued to struggle to manufacture and distribute their products.
Learn more below on the Broken Supply Chain System and Why the Shortages will persist for years
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