Opinion | No, the supply chain catastrophe is not happening because 'Americans are buying too much stuff.' It's just how the supply chain is built. By EytanBuchman.
, a daily container index. This may sound abstract, but to make it clear: Nearly everything you buy moves in a container. So when it comes to that TV, while the ocean freight in 2019 cost just $3.70, today the importer is paying more than $40.
The ability to string together factories, assembly lines, and stores, often is what differentiates successful retail businesses precisely because of its complexity. That's why even before COVID-19, supply chains were increasingly in vogue. It's no coincidence that the CEO of Apple is a supply chain professional, nor that Amazon is essentially a logistics company. In 2018,
That's exactly what happens with freight. Having too much inventory in stock, too much warehouse space leased, or trucking, ocean, and air fleets that are too large means a company pays rent or maintenance fees for assets they are not using. And if the company is paying, you better believe you are too.Ports, container ships, dock employees, chassis to carry those containers, and warehouse space are all optimized for day-to-day demands with buffers built in for peak season.
This is precisely what happened in April 2020, before consumer demand spiked. Across a global fleet of about 5,000 container ships, close to 10% went unused, docked outside of ports.
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