Greater Houston Partnership by Maggie Martin 9/15/2021
The "Perfect Storm" of Global Supply Chain Disruption and What it Means for Houston
Global supply chain woes stemming from the pandemic continue to drag on, creating chaos in international markets. Many companies anticipate the issue will extend into next year. UPS, for instance, recently encouraged consumers to order Christmas presents now. Kroger and Toyota have also voiced concerns, as well as Walmart.
But it's not all bad news for Houston, the country's largest export market. In fact, container traffic at the Port of Houston is on track to set a record this year.
We asked Margaret Kidd, Program Director for Supply Chain & Logistics Technology at the University of Houston's College of Technology, to explain the factors driving the supply chain crunch and what it means for Houston.
What’s going on with the global supply chain and why?
COVID-19 continues to play havoc with global supply chains impacting the efficient flow of trade. An insatiable demand by U.S. consumers has driven e-commerce in Q2 2021 on an adjusted basis, to account for 13.3% of total sales. There's no question that the exponential growth of e-commerce in an extremely short time frame has turned a supply demand imbalance into the perfect storm within a storm.
The other part of the storm is the domino effect that begins with the temporary closure of manufacturing facilities in Asia as a result of COVID. It takes time to bring those facilities back online and ramp up production. Illustrative of this point is the COVID breakouts over the last several months in both China and Vietnam. Those supply chains have seen a number of service disruptions within transportation modes. Over this summer we witnessed the temporary closure at Meishan terminal at Ningbo-Zhoushan Port and Yantian International Container Terminal at Shenzhen Port. The World Shipping Council in 2020 ranked these two ports number 3 and 4 globally. The significance of these temporary closures ultimately create enormous bottlenecks further down the supply chain.
U.S. ports are all working through record trade and congestion. U.S. West Coast ports have been particularly hard hit. Currently, there are 40 ships anchored in LA/LB environs, according to Marine Traffic.
More:
https://www.houston.org/news/perfect-storm-global-supply-chain-disruption-and-what-it-means-houston
