Britt Gillette
On November 11, a record 111 container ships were anchored off the coast of two California ports. This broke the previous record set just 20 days earlier.
The problems involving bottlenecks in these ports are a symptom of a much larger systemic breakdown – a breakdown that threatens to collapse the entire global economic system.
Despite the optimistic forecasts of politicians, the broken supply chain won’t repair itself any time soon. Its problems will carry on well into 2022 and beyond. President Biden can push for 24/7 port operations, but he knows this won’t fix the problem. These promises are nothing but a public relations campaign to make voters think he’s “doing something.”
Containers cover every square inch of these ports. Before new containers can be offloaded from ships, trucks and trains need to move the existing containers to new locations. The nationwide shortage of truck drivers makes that a tall order. And the problem isn’t confined to California ports alone. Supply chain problems and shortages plague almost every industry and factory in the world, covering a wide range of products such as bacon, semiconductors, toilet paper, aluminum, pet food, juice boxes, and a host of other items. Why is this? And what does it mean going forward?
When COVID first struck in early 2020, the global economy came to an abrupt halt. We’re now experiencing the trauma from that high speed crash – and the damage is massive. The sudden collapse in global demand led to negative oil futures prices in April 2020. This caused energy producers around the world to cap production. Now that demand is returning, producers can’t simply increase production overnight. So demand has increased much faster than supply. Fast forward to late 2021, and we’re facing the consequences.
Natural gas prices in the United Kingdom are triple what they were just five months ago. Meanwhile, Vladimir Putin is holding much of Europe hostage as they’ve allowed themselves to become dependent on his energy supplies.
In China, coal generates 50% of the nation’s electricity, and coal is becoming harder and harder to source. All this means one thing – higher energy prices, and higher costs for businesses and consumers. It also means energy shortages and rolling blackouts. These energy disruptions result in additional production shutdowns and manufacturing bottlenecks, further compounding global supply chain problems.
This type of destabilization could result in widespread shortages of everything, including food. This will lead to massive social unrest. As the old adage says, “Fear not the angry man, but the hungry man.” Hungry people launch revolutions. Because of this, they’re a threat to those in power. So what’s the best way for politicians and heads of state to distract from such problems? History says it’s war. War is often the result of trade disruptions, shortages, and/or resource scarcity. This means we live in extremely dangerous times.
For the moment, these supply chain issues may seem like minor inconveniences in your day-to-day life. But they illustrate just how fragile our global economic system is. Just-in-time delivery provides an efficient, cost effective global supply chain system when everything works the way it’s supposed to. But when unexpected events take place, the whole system falls apart.
What happens when grocery stores experience more than just a sporadic shortage of specific products? What happens when food itself is in short supply? When that happens, we’ll also find out how fragile society itself is. Imagine if New York City (or any large urban area) ran out of food. How do you think people will react? What do you think politicians will do to divert attention from such a crisis?
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