- Experts say consumers fueled the supply-chain crisis by buying more goods during the pandemic.
- Online spending has gone through the roof in recent years, causing backlogs at ports and warehouses.
- Shoppers can help alleviate the crisis by buying fewer goods and shopping second-hand or locally.
The global supply chain has been stretched past its limit, and experts say consumers are more than partly to blame.
From panic-buying to 2-day shipping expectations, consumers helped fuel the supply-chain crisis. Insider spoke with 12 experts in labor, logistics, and economics who said shoppers are at least partially to blame for the supply-chain disruptions that left store shelves empty and spawned price hikes.
“We’re a community [of consumers] that supports a very short-term view of things, and by doing so, we’re taking away from any resiliency in the supply chain,” Gad Allon, the director of the University of Pennsylvania’s Jerome Fisher Program in Management and Technology, told Insider.
Surges in demand paired with COVID-19 shutdowns at ports and warehouses left supply-chain workers struggling to make up lost ground. The largest US port has 30% more goods flowing through it and 28% less workers to handle unloading products.
More goods flow through the supply chain than ever before
In 2020, global consumers spent $US900 ($AU1,197) billion more online than in previous years, and spending continues to balloon. In the first half of 2021, global consumer spending was up 22% year-over-year – a $US3.2 ($AU4) trillion increase, according to Tony Pelli, practice director of security and resilience at BSI.
Demand grew so rapidly in the past two years that it’s equivalent to about 50 million new Americans joining the economy, Jonathan Gold, vice president of supply chain policy at the National Retail Federation, told Insider.
“There are very few, if any, industries that could handle a ramp up in demand like that, especially when you consider the lack of scalability in the supply chain infrastructure and manufacturing base,” he said.
The supply chain is operating at a break-neck pace
Multiple dock workers at Los Angeles and Long Beach ports – locations responsible for importing about 40% of US goods – told Insider it’s a major misconception the backlogs are from lower productivity levels.
In 12 of the past 13 months, the Port of Long Beach broke monthly records for the amount of goods it has processed. Since July, the port processed 5.5 million 20-foot (6.10m) shipping containers (TEUs) – a 32% year-over-year increase. Similarly, the Port of Los Angeles processed 6.3 million TEUs in 2021.
Even at a break-neck pace, the ports face infrastructure constraints. What was built to handle 30 to 40 ships at a time cannot suddenly accommodate over 150 vessels.
“It’s not like the ports have gotten slower or retailers are suddenly choosing to route their goods through those California ports,” Douglas Kent, executive vice president of strategy and alliance at ASCM, told Insider. “It’s that people are buying more and we don’t have the infrastructure to support their buying habits.”
The immediate solution? We all consume less.
Experts told Insider further disruptions could be averted if consumers cut back.
“It would not be great for the economy, but if people who were stuck at home started spending their money on experiences, instead of belongings, we would see less ships moving in and out of those ports,” RBC Capital Markets analyst Mike Tran told Insider.
While a complete halt to online shopping seems unlikely, especially ahead of the holiday shopping season, experts told Insider that shoppers could play a smaller role by shopping early, thrifting, and buying locally.
Bayard Winthrop, founder and CEO of American Giant, told Insider shopping locally and focusing on American-made products would help shift the pressure off strained thoroughfares between Asia and the US, while supporting smaller businesses that often get cut out of the equation by retail giants like Amazon and Walmart.