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Supply Chain Impacts to Continue

If you are the type of person who needs a sign…then this may be it.

When you ask people to name a disaster, they tend to focus on large storms, such as tornadoes, hurricanes, or earthquakes. Hollywood and the news have accustomed us to this in their portrayal and coverage of storms. I’m going to ask you to lower the bar and think of a disaster as anything that would negatively affect your household.

Some examples:

  • Power Outage

  • Water Line Break

  • Broken HVAC

It doesn’t matter to you if it is a countywide power outage, your neighborhood, or just your house, no power puts you in emergency mode immediately (i.e. save refrigerator/frozen foods, feeding your family, using in home medical equipment, et cetera). The area of the outage will impact local options (completion with local residents for ice, generators, and food storage containers) and the urgency of the local utility to fix the situation. If it is a local issue, you may have to hire an electrician to resolve the issue. Either way, there is a cost to your recovery.

As we head into the later months of 2022, we are still dealing with a disaster that has not yet been resolved: Supply Chains.

While it appears that many supply chains have improved or we’ve gotten used to a few daily inconveniences, in actuality, the supply chain issues we suffered through in 2020 and early 2021 have never been repaired. As we begin to enter the holiday season, those weaknesses are starting to give and, in some instances, fail.

This time of the year signals a shift in the priority of goods shipped to include those items that people want for under the tree…which means other items will be either delayed or diverted. That’s because China-to-U.S. transit times for ocean freight reached 73 days door-to-door in September, up from 40 days two years ago, according to Hong Kong-based Freightos, an online shipping marketplace.

Why does this matter? Because, in the words of a famous aircraft accident investigator, there is almost never a single simple cause for an aircraft crash…typically, we find it is a result of multiple contributing factors.

Imagine, if you will, that our supply chain is an aircraft that we rely on to get us safely through the year. We rely on it for groceries, utilities, transportation, medicines, et cetera. When everything is operating normally, there is no issue and everyone is content. What happens when it doesn’t operate normally?

When you are planning for what your household would do during a disaster, I hope you truly take your supply chain reliance and needs into consideration. Otherwise, your ability to respond or recover from a disaster may be critically impacted by whatever is available in the market at the time. That is why preparing before a disaster is so critical to being able to respond and recover with minimal loss.

I would ask that each and every one one of you take a moment during your household dinner to discuss what you would do in the face of a disaster? What plans do you have in place, what emergency supplies you have, and what alternative methods you have to feed and care for your family. Consider this your sign to prepare for the potential of more than just the toilet paper shortage of 2019.

In closing, here is a list of supply chain issues noted so far in 2021. Does your household emergency plan include what you would do if you lost a vehicle, faced higher energy costs, or experienced shortages and/or higher grocery prices?

Some examples of supply chain issues so far this year:

  • Semiconductors (computer chips) - impacting auto makers, computers, phones, and more.

  • Used and rental cars - due to impacts to auto makers, prices of used cars have climbed as has reliance on used cars to fill gap needs.

  • Gas - increased travel, transition from fossil to green energy has and will continue to impact energy (gasoline, propane, natural gas, and heating oil) as we enter into the winter months.

  • Plastics - the industry is still recovering from the winter storms in Texas that resulted in water line breaks, pushing prices up nearly 40%. Palm oil prices, and labor shortages are also impacting recovery to the plastics industry.

  • Truck Drivers - increased demand, increased pay, increased fuel costs, increased reliance on home delivery all comes with a cost resulting in smaller trucking companies facing bankruptcy.

  • Homes - in April, the US was facing a shortage of 3.8 million homes, and that shortage (along with prices) continue to surge.

  • Construction Materials - soaring lumber prices due to limited supply is impacting new home construction. The added price to construction averaged an additional $36,000 for increased lumber costs alone.

  • Toilet Paper Shortage 2.0 - impacts to toilet paper, diapers, and tampons are facing supply problems due to port delays and increased shipping costs. As a result, some delivery dates are being pushed back months.

  • Furniture - most furniture pieces use parts from China, which are exacerbated due to delays at key ports in Southern California and high demand from spikes in homeownership.

  • Meat - one word: "packaging." A shortage of packaging materials is impacting not just meats, but dairy products as well.

  • Coffee - imports are often delayed due to congestion at critical US ports facing staffing issues for weeks at a time.

  • Chlorine - you clean with it, purify water, and use it in your pool. Demand this summer sent prices sky high and decreased supply, due to customer demand, raw material availability, staff, and production issues.

  • Corn - bad weather and pandemic-related labor shortages in South America, combined with pig herd culling due to swine fever, led to huge demands on corn earlier this year.

  • Oxygen - yes it is free, but you have to pay to get it into a tank or bottle. A shortage earlier this year is still lingering due to high demand associated with the recent spike in COVID cases.

  • Labor - businesses are hiring and hourly rates are reaching a new high, but there are few takers. Is this a matter of being able to pick where you want to work or reliance on other programs to stay at home? In our area, it was mentioned in a conversation that there are 5,000 [industrial/manufacturing] vacancies in the area of Clinton, Fayette, and Highland County alone, with many restrictions to urinalyses being dropped.

What are some other shortages you know of locally?

As always, be safe and stay prepared!

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