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From pot pies to plumbing supplies to toys, supply chain snarls are creating shortages

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Retailers face shortages of groceries, sneakers, power tools, plumbing supplies, Christmas decorations, and toys; school districts face lunch menu woes; holiday shopping is threatened as supply chain snarls continue to throttle availability of a wide range of products. The specific reasons for each shortage may differ, but it all comes back to a global supply chain designed to be as lean as possible, with few redundancies in workers or stock. When one link in that chain breaks or even gets a little twisted, a lot can go wrong down the chain.

A shortage of McCormick spices comes back to a COVID-19-related issue at a supplier of the glass bottles the spices are packaged in. The result is that McCormick will only have 70% of the usual supply of its gourmet line—going into the cooking-intensive months of November and December. There will be allocations, or purchase caps, on some sizes of Marie Callender’s frozen pot pies through November, also due to packaging shortages. The list continues, including some Kellogg cereals, Pringles Snacks Stacks, Eggo pancakes, MorningStar Farms plant-based hot dogs and bacon, Swedish Fish candy, Sour Patch Kids, Toblerone chocolate, Halls cough drops, and some flavors of Ben & Jerry’s and Breyer’s ice cream.

Overall, CNN reports, “Around 18% of beverages, 15% of frozen foods, 16% of snacks, 15% of candy and 18% of bakery items were out of stock at stores during the week ending on October 3, according to the latest data from IRI, which tracks in-stock levels at leading U.S. grocery chains, big box stores, pharmacies and wholesale clubs.” That compares with pre-pandemic out-of-stock levels of 7% to 10%.

In Europe, “Major fertilizer plants were forced to curtail output because of the rising costs, and now farmers can’t produce enough food as a result,” an industry expert told CNBC. As a result of the fertilizer shortage, there’s likely to be a global carbon dioxide shortage, hitting carbonated beverages and some packaged foods.

A series of major retailers have resorted to chartering ships to get around shipping delays, bringing in-demand stock on smaller vessels (1,000 containers rather than 22,000) and going into smaller ports. In recent weeks, the number of container ships waiting to be loaded or unloaded at major ports in China and the U.S. has spiked, nearly doubling at Los Angeles and Long Beach ports and more than doubling at Chinese ports. The chartered ships may keep essential goods flowing, but they’re likely to mean higher prices for customers and added competitive advantage for the big box stores that can afford them.

All this is happening as the holiday shopping season, which many retailers rely on to stay in business, approaches. Toy manufacturers and industry analysts are sounding the alarm. One told CNBC that he’d seen more shortages of “to-do” and crafting toys that parents have turned to during the pandemic to keep children occupied, while an executive at MGA Entertainment suggested that larger, harder-to-ship toys might be harder to find than small toys that can be crammed in large numbers into shipping containers.

“If your kid has their heart set on something, go buy it now,” Steve Pasierb, CEO of the Toy Association, told CNBC. “Don’t wait.” That probably goes for a lot of things, not just gifts for children. The problem, of course, is that some people don’t have the money to buy holiday toys, or stock up on groceries or household items facing potential shortages, ahead of time. Some people won’t have the money to pay for items that go up in price because of supply chain problems. Smaller stores will be hit harder, as previously mentioned. There’s always the temptation to be smug about the thing you aren’t going to want to buy, but supply chain problems are getting widespread enough that it’s likely we’ll all face some kind of shortage in the coming months.

One cheerleader for capitalism much quoted in the media doesn’t think it’s going to be a longstanding problem, though.

“I should never do this, but I’ll make a forecast,” JPMorgan’s Jamie Dimon said recently to an audience of fellow capitalists. “This will not be an issue next year at all. This is the worst part of it. I think great market systems will adjust for it like companies have.” Except that some companies are forecasting problems through the early months of 2022, and signaling that they are struggling to adjust.

And Dimon doesn’t seem to understand how it works to need a specific thing.

”Keep in mind, the consumer’s buying other stuff,” he said said. “They can’t buy cars, they’re buying home improvement; they can’t travel internationally, they travel domestically. The spend level is very high.” But, like, if you need a car, home improvement products are not helpful. If you need plumbing supplies, electrical supplies are not going to do the trick.

Cheerleading for the consumer capitalism of just-in-time supply chains and rock-bottom wages can only do so much to disguise the problems they create. It may not be a bad thing if the coming months make that clear, but that doesn’t mean it will be an easy thing.


Wednesday, Oct 13, 2021 · 3:23:08 PM +00:00 · Laura Clawson

President Biden is getting involved, with a planned announcement that Walmart, FedEx, and UPS will work 24/7 at key ports to move goods faster and eliminate backlogs.
 
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