Weak links in the supply chain

(CBS NEWS)

“We’re going to need a crate of lemons; hope they have lemons tomorrow.

Life doesn’t give lemons to Tony Pertesis, who owns and runs the Southport Diner in Connecticut.

And not just lemons: “You order Heinz, it’s not here. I order Gatorade; it took weeks to get Gatorade. The waitress will come out and say, “I don’t know where the whipped butter is.” I’m going to call my distributor and say, “What happened to the whipped butter?” They’ll say, ‘Oh, we’re out of stock until next week.’ “

And when he can get his hands on supplies, he pays a lot more for them. “I used to buy bacon for $ 2.40 a pound. It went up to $ 6, ”Pertesis told correspondent David Pogue. “But how are we supposed to sell bacon when it costs us so much?” “

You’ve probably noticed something weird in the supply chain as well. So you can’t buy what you want anymore. Book publishers struggle to get hold of paper… automakers can’t buy computer chips… builders can’t get lumber… container ships at port wait days to be unloaded… and everyone is back to hoarding toilet paper!

What’s so strange about the shortages is that there is actually an overabundance of goods entering the country.

And there’s a good chance everything you’d expect is in shipping containers somewhere.

Beth Rooney, deputy director of the Ports Department of the New York and New Jersey Port Authority, explained: “One of these containers can hold 10,000 pairs of sneakers, 200 queen-size mattresses, 70 giant screen televisions. flat. Thus, 95% of consumer goods enter the United States in these same containers. “

“So these big container ships, how many are they carrying?” Pogue asked.

“Anywhere between 9,000 and 16,000 of these boxes at a time.”

“And how much is this pile?”

” Few hundreds ! ” she laughed.

Rooney is perfectly placed to explain the first part of the supply chain crisis: “As the pandemic hit various parts of the world, factories overseas have closed. When production started to increase, then we saw a significant increase in freight volume. We are all seeing about a 30% increase in our freight business year over year. “

And even better (or worse), the holidays are coming.

“Of course we are also living Christmas,” Rooney said. “If the goods aren’t here in the harbor in mid-September, they’re usually not on the shelves for Christmas. “

OK, so if there is no shortage of goods, then where is the shortage?

According to Yosi Sheffi, director of the Center for Transportation and Logistics at MIT, “The underlying cause of all of this is actually a huge increase in demand. … People did not spend during the pandemic. And then all the government help came in; billions of dollars have gone to households. So they order stuff. They are ordering more and more things. And not all of the world’s markets were ready for it.

So wait, there are plenty of products, and plenty of people who want to buy them – so what’s the problem?

Here’s a clue: the trucks.

“I think our drivers are heroes,” said Mark Rourke, president and CEO of Schneider, the country’s third largest trucking and logistics company. “They didn’t have a work-from-home option, did they? And so, the country needed food, the country needed cleaning supplies, the country needed medicine. And they really made this whole country move. “

Pogue asked: “So I order something, [it] arrives in America on a container ship. Can you describe the steps to get it to my door? “

“Well, the first thing we have to do is get this international box off the ship, into the port,” Rourke said. “And then we need a truck driver to come into this port and usually take it to another warehouse. And then we need another driver to come and then move him across the country or wherever his destination is, a distribution center. “

“Looks like the truck drivers are sort of the key to all of this.”

“Pretty much everything you touch, everything you buy or consume, has been on a truck at one point or another, that’s for sure,” Rourke said.

But the domestic labor shortage is also playing a role in the supply chain crisis, especially for truck drivers.

“How short are we of what we would need to handle this huge swell? Pogue asked.

“Well, for every order that Schneider accepts today, we could make one more than we can.”

“So you have half the personal power you could really use?” “

“I could use it right away, absolutely,” Rourke replied.

So that’s our problem: an incredibly perfect storm. A huge wave of goods entering the country, a huge wave of people wanting to buy it, and a hopelessly overwhelmed transportation system that wasn’t ready for either.

Back at his restaurant, Tony Pertesis is busy keeping his customers happy and waiting for the supply chain nightmare to end.

Pogue asked, “Is this a minor inconvenience? Or is it, like, a sleep loss situation? “

“Look, I lost a lot of sleep,” Pertesis said. “As long as I do my best, I go out and fight, there is nothing I can do. It all depends on God.

But MIT’s Yosi Sheffi thinks there might be light at the end of the tunnel. When asked when things would get back to normal, he replied, “I would say, without government intervention, it will be at the end of the second quarter of next year. But the prices will remain high.

And maybe we’ll come out with a little wisdom as well.

“We get so used to abundance that we kind of lose perspective,” Sheffi said. “And if you don’t have the right color of sneakers and your son or daughter doesn’t have the exact brand and they have to buy a different one, live with it. This is not the end of the world. It may even be good for you.

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