The global network that feeds the economy is overwhelmed and evolving.
COVID-19 has shut factories in Vietnam and Indonesia, containers are piled up in U.S. ports and in short supply in China, ships are waiting at sea for a spot to unload at key ports, workers are thumbing their noses at low paying shipping jobs, microchip shortages are slowing the system, and on and on.
“Supply chains are very finely calibrated instruments,” said John McQuiston, head of structuring and program management in Wells Fargo’s global receivables and trade finance business. “You don’t hold inventory is rule number one. That’s because it equals cash. The less inventory I have to hold, the less cash I have to spend. These supply chains get finely calibrated by virtue of that dynamic of ‘hold as little as possible.’ Writ large across a macro economy of $19 trillion, that has an effect.
Now that the supply chain is such an in-your-face problem, surely companies and the very techie next generation is going to be looking for solutions. So in the long run, there’s a possibility that that coal shortage that’s kept a factory in China dark or that container stacked up in the Port of Long Beach when it should be on the other side of the world leads to something new — maybe a new kind of closer to home manufacturing sector that relies more than ever on automation. Or something else.
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