It’s official: According to industry insiders, the supply chain nightmare that has been plaguing the United States for the past couple of years is set to remain for the long-term, aggravating shortages and resulting in a historic slowdown in domestic production at the same time retailers grapple with record shipping costs and a weakening consumer demand. Even though many were expecting the crisis to ease now that the health crisis started fading away, experts say that’s not the case at all. In a repeat of the 2021 scenes, thousands of empty containers are piling up at U.S. ports, contributing to five-digit container prices, as well as the worst delivery delays on record, and empty shelves all across the country. In some places, rationing has already begun, and the trend is expected to intensify as we move into the second half of the year.
Approximately 4 million containers are stuck outside ports worldwide as congestion takes a turn for the worse. As analysts with logistics company RBC noted, that’s the perfect recipe for even higher shipping costs. “When ships are scarce, regardless of whether due to an increasing number of vessels queuing at a port or true demand, prices see upward pressure,” they wrote in a report released last week.
In the past twelve months, container costs have risen ten-fold, jumping from $3,000 to $30,000. This year’s shipping interruptions in China and Europe have exacerbated the container shortage and drove prices to unprecedented levels, according to Josh Saffran, director of Plug & Play Tech Center in Rogers. In a separate report released by Morgan Stanley on Monday, analysts said they don’t expect capacity increases until late 2023. They predict that container prices in the spot market could reach up to $47,000 this summer, outlining that as the trucking industry faces labor shortages, that is also going to boost costs and increase delays.
Now that the U.S. economy is facing growing imbalances, supply chain problems are set to trigger a bullwhip effect, explained FreightWaves CEO, Craig Fuller. American consumers are incredibly stressed about the state of the economy and their personal financial security. Record inflation, crashing stock markets, higher interest rates, and growing economic and financial uncertainty are having a dramatic impact on consumer confidence.
Before U.S. supply chains had been taken over by chaos in 2020, most Americans believed that the phenomenon of product shortages was a problem that only foreign countries had to face, and one they would never experience in their lifetime. But things have changed very rapidly. At this point, millions of consumers are already rushing to stock up, with some saying they’ve never been so stressed out about empty shelves, while others believe that what we’ve gone through so far was just the start.
The cycle of high prices and empty shelves is creating a vicious cycle where many buyers rush to stockpile products at home before they disappear from stores again – a phenomenon that is likely to gain force in the months ahead. In some places, rationing of some food products has already begun. According to the National Herald, some supermarkets have started rationing flour, sunflower oil, sugar, corn, eggs, milk, dairy products, cleaning supplies, and canned goods due to supply problems.
So far, most cases of rationing have been concentrated in European countries, but as one could figure it out, it was only a matter of time before it started happening in the United States. This is just another indication that the hour is late, and that things are getting really crazy out there. Right now, some parts of the country are still experiencing the calm before the chaos. But it’s safe to say that it won’t stay that way for long. So use the time you still have left to prepare wisely because things are rapidly spinning out of control out there.
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