Economist: Supply Chain issues improving

Posted 12/31/69

Supply chain issues in the U.S. are improving and once-clogged ports are less congested than in previous months, according to Mark Vitner, a senior economist at Wells Fargo.

In October, supply …

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Economist: Supply Chain issues improving

Posted

Supply chain issues in the U.S. are improving and once-clogged ports are less congested than in previous months, according to Mark Vitner, a senior economist at Wells Fargo.

In October, supply chains around the world bottlenecked and caused record shortages in goods ranging from household products to electronics since the start of the pandemic.

Now, large ports in Savannah, Georgia, and Charleston, South Carolina, are less congested and products are moving through at faster rates, Vitner said.

“(Before), there was a huge backlog of 25 to 30 ships,” Vitner said. ‘

In the past, the backlogs in products sitting on ships waiting to be unloaded was compared to “a python trying to swallow a pig,” according to Hitendra Chaturvedi, a supply chain expert at ASU’s W.P. Carey School of Business.

New holding facilities and moving more products via rail have allowed shipping rates to fall and congestion to be alleviated a bit, Vitner said.
“The supply chain is getting a little bit better by some measures,” Vitner said. “We are certainly not back to where we were (pre-pandemic).”

Supply chain issues have effected prices at grocery stores and been a contributing factor in inflation levels not seen since the early 1980s.

Manufacturers have increased production of items such as canned goods, cereals and pre-packaged foods in order to help combat food shortages, Vitner said.

In general, Valley grocery stores now have less shortages of food items, said Mark Miller, president of the Arizona Food Marketing Alliance. Miller works with about 1,200 grocery and convenient stores in Arizona.

One method to get more overall products into stores is reducing the variety of flavors on certain items, he said.

“Instead of 10, now we have four or five (flavors on a certain item),” Miller said.

Plastics from Gatorade bottles and glass from Mexican beer have been difficult materials to source since the start of the pandemic. But the situation has improved over time, Miller said.

Arizona summer temperatures could cause demand spikes for items such as Gatorade and Powerade.

“The demand increase could stress the system a little bit,” Miller said.

Prices for milk and meats have risen during the pandemic because of the extra labor involved in those prospective industries, he said.

But Miller said the supply chain issue extends beyond the U.S. borders and said global problems effect local markets.

“The world is connected, it’s not just about the U.S.,” he said.

Bumps in the road from supply chain hiccups might not be over for good.
Economists have said stimulus payments doled out after the start of the pandemic have contributed to supply chain problems.

On Thursday, Treasury Secretary Janet Yellen said the global pandemic and Russia’s invasion of Ukraine highlight the possibility of big economic shocks in the future, adding that downturns are “likely to continue to challenge the economy,” an Associated Press report said.

Vitner said industry experts are going to have to continue to have an open mind about how to solve current supply chain problems.

“Everyone’s going to have to get more creative,” Vitner said.

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