The Supply Chain | Eastern North Carolina Now

Could This be the Source of a Financial Collapse

John Woodard

In my corporate life, I was the RVP of the Ocean Marine Cargo division of our company, which put me in touch with various clients and potential clients, mostly in New York, the center of the cargo insurance industry universe. Since leaving the Company I have performed a number of cargo surveys and have kept in touch with people that I know that are still in that business. I have been watching the developing problems with our supply chain and have become increasingly concerned about a collapse of the supply chain which could easily become a collapse of our entire financial system. This is not hyperbole. Instead, executives of various companies that move cargo from ship to shore and from the docks and warehouses to local or regional distribution centers and ultimately your local store, are starting to talk about their concerns while at the same time attempting to tone down the rhetoric and not produce a panic buying situation.

A.P. Moller- Maersk is the world’s leader in the container ship business. Their CEO, Soren Skou has painted a bleak picture of global supply chains in an operations update published on Friday.

“Supply chains are under major stress with historic congestion and bottlenecks plaguing just about every aspect of shipping, with about 10% of container ship capacity waiting at our outside clogged ports with no sign of easing this year. There have been many challenging periods over the years, but the situation over the last 12 months is unique, inasmuch as it had a global impact. All continents are seeing high volumes and operational challenges, restricting both ocean and land-side capacity at the same time. Like all carriers, his company has been heavily affected by Covid-19 outbreaks slowing down the local operations. Whether it is a port, vessel or warehouse, when one becomes impacted it quickly results in a downward spiral as delays accumulate”.

“We see pockets of improvements, only to get setbacks when our operations encounters new Covid-19 outbreaks and lockdowns. As an example, we point to the situation in Vietnam, home to a number of factories and warehouses, where Covid-19 cases are increasing and lockdowns continue. With this situation, customers not only in Asia and North America but also globally will experience a direct impact on their supply chain. In Europe for example, there is waiting time to birth almost every large port due to labor shortages and high yard densities. In dealing with these challenges, we have deployed more vessels and containers prior to the pandemic, yet we see unfortunate delays that continue to lead to missed sailings and missed capacities. We are looking to optimize all core doors in the rotation, call alternative ports and actively reposition empty containers, all with the objective of leaving as little unused capacity as possible on all legs. However, when experiencing sudden and significant spikes in demand, the situation remains challenging.”

The quoted text has been taken from the update report by CEO Skou.

Other groups in the supply chain such as the International Air Transport Assoc (IATA), the International Road Transport Union (IRU), and the International Transport Workers Federation (ITF), which represents 65 million workers around the world, have also expressed their fears of collapse. They warn that if nothing is done, that a collapse of the global transportation system is likely. Global supply chains are beginning to buckle after two years’ worth of strain.

All transport sectors are seeing a worker shortage and expect more to leave. In a letter to the WHO (World Health Organization) and the ILO (International Labour Organization) the U.N. General Assembly has been asked to call on heads of government to take meaningful and swift action to resolve this crisis.

In addition, the UK supply chain in crisis leads to the worst food shortage since the 70’s, the British pound is at an 8month low as stagflation crisis fears take hold and Britain needs 150,000 HGV drivers.

In this country, Costco is dealing with port delays, container shortages, Covid disruptions, shortages of components and so much more that they are chartering its own container ships between Asia and North America.

All of this is a pandemic driven problem which is causing American Consumers to binge buy.

Have you heard the press report any of this? A few have done some scant reporting but none have done any in depth reporting that I know of. So, we are attempting to make you aware of what lies ahead, especially if the government continues to press the strategy of vaccine at all cost.

Have you been to the grocery store lately? Shoppers are finding that products which they have purchased for a long time are either in short supply or the shelves are completely empty. Even stores such as Walmart who make some products that are sold in their stores have been out of stock for quite some time. I was in a Walmart store two weeks in a row looking for sugar. The first week all they had was 40-pound bags with no smaller quantities and the second week they had no sugar at all.

In recent years, there has been an attempt to control the amount of inventory that’s kept inside the store warehouse called “just in time cargo management”. The theory being that if you kept standing inventory at a minimum, technology would let you know when you are running short of certain merchandise items for resupply so that you would not have to keep large quantities in the store. However, for this to work, the trucks have to be running and drivers are working and suppliers are bringing merchandise to the distribution center. And that there are workers at the distribution center to load the truck trailers going to the store. And of course, this scenario has to mean that overseas merchandise coming into the United States is not being held up with vessels loaded with stock that cannot get offloaded.

When there are holes in the supply line, it doesn’t take long before the bottlenecks begin to choke off the movement of products to American stores.

The entire trucking industry is suffering from a lack of licensed truck drivers to the point where they are paying signing bonuses and high wages to attract qualified drivers. And that is just one element of the problems that are being faced today in getting merchandise into the stores that includes food, gasoline and all other essentials, and threatens the Christmas holiday this year.

So, when will this problem stabilize itself? There are a range of opinions from a variety of sources, but the truth is, no one really knows. All we have are educated guesses. There is no one thing that is going to make the difference.

One problem is that everybody has been led to believe that the coronavirus has the potential to be a killer or at least is transmissible from person-to-person in close proximity. So many companies err on the side of caution. With demands that employees get the jab or lose their job, or that the government closes down certain businesses because of failure to adopt their unconstitutional procedures, the problem has the potential of increasing. The government continues to push the vaccine, which is not a vaccine at all. Their insistence on this one treatment ignores therapeutics that are commonly available and at low cost such as Remdesivir and Ivermectin, among others.

Most people don’t fully understand what a collapse can mean to their existence. A great many products can be removed from the supply chain without doing any real damage to society. But food is not one of them and neither is fuel. We have already seen what the effect of the Colonial Pipeline shut down did to people in the affected states. What would it be like if that example was duplicated all over the country? What if food supplies were not delivered to the stores and the available merchandise was limited at best? These are questions that we may have to face unless this supply-chain issue is resolved and quickly. The loss of Christmas, may look like child’s play compared to a full-scale collapse of the transportation industry. We can only hope that a resolution can be achieved before the doomsday affect becomes reality.