U.S. businesses rush when supply chain breaks, shortages

In the United States, shortages of metal, plastic, wood and even wine bottles are now common.

Previously, the purchase of input products for an assembly line could be done easily by clicking on an “order " button. Buyers only need to wait a few days or at most a few weeks to receive the goods.But this is not so easy anymore, especially when supply chains are broken and supply shortages occur around the world because of the COVID-19 pandemic.

Workers work at a factory in Pocomoke, Maryland, USA on March 1, 2018. Photo by AFP / TTXVN
Lack of steel frame to bottle case

In the United States, shortages of metal, plastic, wood and even wine bottles are now common.

Buyers - often businesses have to wait for the seller to deliver goods that were once abundant, but only if they can successfully order. This is greatly affecting the business of many businesses. As with tent manufacturer Diamond Brand, they cannot deliver to customers because some tents lack qualified aluminum tubes as frames, while others lack suitable zippers.

Shortages in input supply are affecting every product, from bulldozers to bourbon wines. Heavy equipment manufacturer Caterpillar Inc. warned in July that its profits would be affected in the current quarter, partly due to rising prices for hard-to-buy components. The company says it is trying to find non-traditional supplies to cope with a shortage of plastic particles and semiconductors.

Lawson Whiting, CEO of brandy producer Brown-Forman Corp., also told investors earlier this month that a shortage of important packaging materials, especially Glass, continues to be a headache.

Challenges continue to arise

In addition, new challenges continue to arise. The hurricane-induced disruption to U.S. refineries has once again threatened the supply of plastic and other basic materials to U.S. businesses.

The further exacerbation of the current situation is the congested transport routes. With mass production flocking seeking to increase supply at the same time, the containers, ships and trucks needed to transport goods are often less available. And when there is, the cost has often skyrocketed. That broke down some of the mechanisms that often help control supply and prices.

Coupled with supply shortages are terrible price hikes – these developments have raised fears of a prolonged wave of inflation in the world's largest economy.

David Reilly, president of Plastic Manufacturing Company United Solutions, said the price of plastic has skyrocketed-with some of the types that have risen 100 percent in the past year-as the company's biggest challenge.

Often, he would ask his buyers to scour foreign markets, including China, to find cheaper plastics. The current situation can not use this way. Because freight rates have risen too much, causing all price advantages to be wiped out.

Long lines of vehicles waiting to enter port after announcing work return (photo: Los Angeles Times)

To address the immediate situation, a number of industries are rushing to build new factories, including semiconductor manufacturers under growing demand for the chips needed for automobile and electronics manufacturing.

But not all manufacturers want to build new factories. For example, the bicycle industry is heavily concentrated in Asia and manufacturers there worry that the current surge in demand is only temporary. According to experts, businesses accept increased production time, but are very hesitant to invest more in new infrastructure.

Pressure on Fed policy

There is growing tension among Federal Reserve policymakers over how to assess the long-term impact of supply chain faults on prices.

Some officials have acknowledged that the recovery momentum of the U.S. manufacturing sector remains limited by supply issues and that they are not resolved as soon as expected.

However, some Fed policymakers are confident that price pressure will drop after some supply disruptions are resolved. Others are more cautious. How this debate could affect the Fed's plan to reduce its asset purchases, as well as how soon the central bank will raise interest rates from the current near zero.

Featured Post

Paradox in the U.S.: the risk of economic recession from the healthy job market itself

At the moment, the U.S. economy is said to have not receded. However, the story of the coming time may be completely different...

U.S. spending and income plummeted in states to stop emergency unemployment benefits early

According to one study, states in the U.S. early end of emergency unemployment benefits have seen a slight decline in unemployment but spending and incomes plummeted, a reality that could take place across the U.S. as subsidies programs end altogether.

The U.S. economy unexpectedly added 528,000 jobs in July 2022

The U.S. Department of Labor reports that the job increase helped lower unemployment back to a pre-pandemic low of 3.5 percent. Employment growth exceeded in June 2022 has been adjusted higher.

Many U.S. states suspend unemployment benefits because of COVID-19's influence

The states of Iowa, Alabama, Arkansas, Mississippi, Montana and South Carolina announced additional subsidies that were planned to be paid through September as part of the stimulus package is worth 1 1,900 billion.

U.S. economy declines by 1.5% in Q1 2022

The U.S. economy declined in the first three months of 2022 despite consumers and businesses continuing to spend at a steady pace. However, the decline of gross domestic product (GDP) - the widest measure of economic output - is unlikely to signal the beginning of a recession for the U.S. economy.

U.S. business sees COVID-19 outbreak and manpower shortages as the biggest risks next year

According to a survey by the National Association of Business Economists (NABE) published on Jan. 24, U.S. companies have had a good year of business, but all are concerned about the trend of the number of cases of COVID-19 rising again, although supply problems are expected to cool down.

Trending Videos