Until it becomes more expensive to grow peaches in Argentina, package them in Thailand and sell them in America than it is to do all three tasks in the United States alone, delays and shortages will be the norm, according to Dr. Sal Mercogliano.
The chair of Campbell University’s department of history, criminal justice and political science, spoke to a dozen members and guests of the Lillington Rotary Club on the evening of Oct. 21. Mercogliano, an expert in maritime history at Campbell, was quoted extensively by The New York Times and other publications in August in regard to the Ever Given, a container ship that became stuck in the Suez Canal for six days, disrupting shipping worldwide.
“The Ever Given affected everyone,” he told Rotarians, including items distributed in Harnett County.
Mercogliano said there are five main reasons for the supply chain backlog, which has seen as many as 76 huge container ships unable to unload at the ports of Los Angeles and Oakland, the two main points of entry for most goods distributed in America.
The first is COVID-19, which forced a 60-day lag on the supply system worldwide due to shutdowns of manufacturing and difficulty getting raw materials.
The second is that COVID changed customers’ habits. Increased consumption by people staying home during the pandemic strained the supply system, which is geared to “just in time” ordering. This means goods based on anticipated needs are already in the supply line before a consumer even orders. All they need to do is push a button and the item shows up on the doorstep. Unless, that is, preferences change.
During the pandemic, the need for home toilet paper surged and the need for commercial toilet paper receded — all of a sudden, he said. “There was plenty of both, just in the wrong places.”
The third reason is that global shipping has changed, with bigger ships carrying more goods because it’s cheaper. “The first container ships carried 58 containers. The Ever Given holds 20,000 and the biggest ship, the Ever Ace, holds 24,000. From water line to the top of the containers it’s as tall as a 15-story building. All controlled by about 25 people,” Mercogliano said.
The fourth reason for shipping problems is the consolidation of shipping companies.
Fifteen years ago, the top 20 shippers handled 50% of all shipping, he said. Now, just nine companies handle 85% of the world’s shipping.
And fifth is the butterfly effect, which is disruption caused by unexpected circumstances, such as a hurricane or typhoon or the Ever Given getting stuck in the Suez Canal. These are events no one can predict, but they have a huge impact.
Mercogliano didn’t hold out much hope that supply chain shortages would ease any time soon. Some companies, such as Costco, are chartering their own ships to get around the bottlenecks, which might help. Still, seeing less on shelves or waiting longer for orders may simply be something consumers will have get used to.