The global supply chain infrastructure that exists simply can’t handle the volume of products flowing through the economy. The root cause can be blamed on the extraordinary government stimulus that has stimulated demand.
The United States and other countries race through trillions of dollars of inventory while domestic and global production was shut down.
There were months of global lockdowns and trillions in demand stimulus. The global lockdowns hit production hard. Supply has to catch up where demand has months of headstart and where demand has had trillions in stimulus. The stimulus also has disincentivized labor. Workers could stay home and get stimulus check instead of working at the factory, driving a truck or working at ports and warehouses.
The policies of government appear to serve politics and were bad plans for economy and supply chain.
The supply and demand imbalance is still causing shortages and high prices in energy, steel, materials, components and products.
The manufacturing sector has a huge and unprecedented backlog of orders.
The container ships, ports, labor, trucks, warehouse capacity, and rail infrastructure all have significant supply chain challenges in handling the surge of cargo.
More government stimulus just makes problems worse.
This could go on for a few years and break the typical three-year boom-and-bust cycle.
Bottom line- the governments and pandemic response broke things badly for 12-18 months and it will take years to get things fixed. It will take longer to get into balance if unbalanced and crude money dumping stimulus is used again.
SOURCES – Freightwaves and Brian Wang analysis
Written by Brian Wang, Nextbigfuture.com
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
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