Supply chain Scrooge

MARY REICHARD, HOST: It’s Thursday the 28th of October, 2021. You’re listening to WORLD Radio and we’re so glad you’ve joined us today!

Good morning, I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher. First up on The World and Everything in It: kinks in the supply chain.

They’re creating headaches for retailers now. And, even worse, they’re expected to upend the usual holiday shopping routine this year. If you haven’t started making your list, and checking it twice, you might want to get on that.

REICHARD: President Biden announced plans earlier this month to help clear the backlog of goods headed to U.S. ports. But will it be enough to keep shelves stocked in December? WORLD’s Josh Schumacher reports.

SCHUMACHER: You guys are experiencing some difficulties ordering stuff?

GREGERSON: Yeah, definitely. I mean, normally for us, everything we need is in a warehouse somewhere within the country...

JOSH SCHUMACHER, REPORTER: Mike Gregerson works at Spokes, Etc. Bicycles in Vienna, Virginia. He’s in charge of ordering all the bikes, parts, and other gear.

GREGERSON: Right now, very few things that we need are in stock somewhere. So everything we we need, we order. And then it comes in a week or two. Sometimes it's a year or two out with some bikes right now. Next availabilities. Sometime in 2024. And we're in what? October 2021. So it's a, it's a big hurdle, trying to figure out what we need when it's coming in and kind of planning around that.

Spokes isn’t the only business having problems getting products. Companies all across the country are struggling to fill customers’ orders.

Sean Higgins is a research fellow at the Competitive Enterprise Institute.

HIGGINS: Basically it's as simple as everything is backed up. And sort of the first domino to cause everything to fall was the COVID crisis that created worker shortages, slowed down the supply chain at various points because of safety measures, and social distancing requirements and, and all that type of stuff.

On top of that, retail sales spiked during the pandemic. Jim Inglis is a former executive for Home Depot.

INGLIS: Prior to COVID, our economy was already operating at very, very full speed. And it didn't have a lot of ability to expand at a faster rate, due to the fact that we were pushing our infrastructure already. And then to everybody's surprise, the biggest impact of COVID has been an incredible increase in retail sales and incredible increase in building materials sales. And so suddenly, we were not only going to operate at the speed we were operating pre COVID. But now there's additional demand on top of that.

That slowed things down even more. And 18 months into the pandemic, supply chains are still struggling to keep up with demand.

Earlier this month, President Biden tried to speed things up by asking one of the nation’s busiest ports to stay open around the clock.

BIDEN: The Port of Los Angeles announced today that it's going to be begin operating 24 hours a day, seven days a week.

And Biden hopes other parts of the transportation supply chain will follow suit. In theory, that should help businesses like Spokes get their products faster. Mike Gregerson says just about everything he orders comes through one of those busy California ports.

GREGERSON: Pretty much everything we get comes from Asia. So it's all coming from boats. So all the shipping through California, and rail and truck and everything. So we have to deal with that as much as everyone else does.

But moving ports to 24/7 operations might not make much of a difference in the short term. Lane Cohee teaches about supply chains at Palm Beach Atlantic University.

COHEE: If you just stopped, you know, all shipping into those two ports, it would take 11 days, to clear all that backlog. And obviously, nobody's stopping the shipping. So it's going to take some time, like any log jam, to work through it.

And Jim Inglis says that’s time holiday shoppers don’t have.

INGLIS: Buy your Christmas presents early because you know, they're not going to be available in about a month.

Lane Cohee isn’t quite so bah-humbug.

COHEE: I think that in the long run, you know, we we will still have a pretty good holiday season, I think we will see some of the impacts. But But, you know, by and large, we’re pretty resilient. And retailers have a way of finding ways of being able to get things to the shelves. And I think some combination of a little bit more patience and a little bit more, you know, alternative sources, you know, could benefit us.

Back at Spokes, Mike Gregerson doesn’t expect his backorder problem to backpedal any time soon.

GREGERSON: I think it's the process for at least another year or so. I was saying you're probably between 23 at the end, maybe 2024. When something, it might get back to normal. But we're, we're dealing with it like everyone else's. So it's a whole whole global system, not necessarily just our category, so I think it's definitely gonna be a year or two or more before everything gets back to normal.

Reporting for WORLD, I’m Josh Schumacher in Vienna, Virginia.

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