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Supply chain issues: What are they and how will shortages impact the holiday shopping season?

·4 min read

Food prices are going up, gas prices are climbing, and finding that great gift for the holidays might get tougher.

The reason? Struggles linked to our global supply chain.

Last week, President Joe Biden revealed plans to help tackle bottlenecks within our supply chain, including plans to turn ports into 24/7 operations. Meanwhile, shipping companies FedEx and UPS as well as retailing giant Walmart will expand their efforts to ease the strains on the supply chain.

“This is the first key step for moving on entire freight transportation and logistical supply chain nationwide to a 24/7 system,” said Biden.

So, what is the supply chain, and why should you care about these issues? Let's explain:

What is the supply chain?

The supply chain is how we get nearly all of the stuff in our lives that we want and need. It's a system that helps make and deliver our favorite products. It involves the manufacturers of these products, the companies that supply materials to create them, the cargo ships, trains and trucks that deliver them, and the stores selling them.

“You can think of this as a pipe that connects supply and demand," said Tinglong Dai, a professor of operations management and business analytics at Johns Hopkins University.

It's also complicated. Take the iPhone, for example. To build one, Apple has supply chains with companies providing materials for its smartphone such as Corning, which makes precision glass for use on the iPhone. Then you have the supply chains Apple uses to distribute iPhones to you.

"It’s a complex network of various different entities that are working together in order to enable us as consumers to receive our products in the time that we expect," said Marko Bastl, the director of the Center for Supply Chain Management at Marquette University.

►Grocery store shelves bare?: These products may be hard to find due to supply chain issues

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►Food prices keep rising: 3 tips to save on your groceries

President Joe Biden has struck a deal with the Port of Los Angeles to turn it into a 24/7 operation to move ships through more quickly.
President Joe Biden has struck a deal with the Port of Los Angeles to turn it into a 24/7 operation to move ships through more quickly.

What is wrong with supply chains?

The issues affecting supply chains are linked to the COVID-19 pandemic. Bastl said the pandemic is unique because it has impacted both supply and demand. Some manufacturers still aren't operating at the levels they reached before the pandemic.

The pandemic also affected companies focused on logistics, such as warehousing to store items that travel overseas and transportation like trucks and trains to deliver them across the country, said Bastl.

At the same time, due to millions of us staying at home to help prevent the spread of the coronavirus, we ordered a lot of stuff, from personal computers to sports equipment.

"It’s almost like a perfect storm of loss of manufacturing capacity as well as loss of logistics capacity, married then with the increase in demand," said Bastl.

Why are cargo ships not docking?

One of the enduring images of this crisis has been several container ships sitting idle at ports waiting to unload their goods.

Biden has struck a deal with the Port of Los Angeles to turn it into a 24/7 operation to move ships through more quickly.

Dai said the process of unloading these ships requires a lot of work and people, including warehouse workers and drivers to ultimately deliver these products to retailers.

“We have increased the number of goods coming here to the U.S., but we do not have more truck drivers, we do not have more warehouse space," said Dai. "So then that’s where those cargo ships are stuck."

What products are hit hardest?

Bastl said it depends on the industry because of the different supply chains they use, but he notes consumer electronics, such as personal computers and video game consoles, as well as toys, have been affected most by supply chain issues.

Dai said "low-end inexpensive products" across industries will be impacted as well, forcing us to buy a more expensive item to compensate.

How do supply chain issues affect me?

All of these issues have a direct impact on what we can buy – on what's available to buy. That's the reason consumers have been advised to start their holiday shopping early. Dai projects we'll see higher prices and fewer available products. And we may see more empty shelves at stores due to shortages and delays, Bastl said.

"The longer that these delays will last, the more likely it is companies involved in production, distribution and movement of our products will not be able or willing to absorb this cost, and they’ll start pushing them on to consumers," Bastl said.

Kelly Tyko and Keira Wingate contributed to this report. Follow Brett Molina on Twitter: @brettmolina23.

This article originally appeared on USA TODAY: Supply chain shortages: Why is there a shortage; what is the impact?

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