Shortages

Shortages of shipping containers (actually there are probably enough of them but they are mostly in the wrong places) and microchips haven been affecting industries and disrupting supply chains all over the world. But now the situation is getting worse in the sense, that consumers are now starting to feel the pain as well. Just take the situation in the UK, probably one of the more affected economies:

• Lack of CO2: Carbon Dioxide (or CO2) is used in packaging fruit, vegetables and meat in order to keep them fresh longer, as well as in the production and bottling of carbonated drinks, including – and this may be particularly unsettling for some Brits – beer. Lack of CO2 could mean that less of these products find their way onto the supermarket shelves, which, in turn, could inspire some consumers to panic buying.
• Lack of natural gas: Natural gas heats most homes in the UK and is a major factor in the production of electricity. A number of reasons have led to a shortage of natural gas, which, as a result has become more expensive – which in turn has also increased the cost of electricity. A number of smaller energy providers in the UK who sell their gas and electricity on fixed cost contracts but buy the stuff on the open market have already gone out of business (including my provider), with others no doubt to follow over the next few months as the crisis is unlikely to subside anytime soon.
• Lorry drivers: Driving a truck is a thankless job, and HGV drivers are constantly under time pressure with an increasing volume of traffic. This further impacts supply chains with goods hitting the shelfs later and vegetables perishing in the fields and in warehouses since no lorry drivers take them to supermarkets. HGV drivers used to earn on average £27’000 to £30’000 per year, but are now offered £55’000 per year and more, not to mention a potential signing-up bonus.

As we are approaching Christmas, the issues with microchips and shipping containers are now potentially going to have an impact on consumers as well: Many Christmas presents will no doubt be manufactured in Asia but it may be increasingly difficult to get them to the UK before shoppers start hitting the high streets and online shops. Big US retailers such as Walmart have started to charter their own container ships in order to ensure the goods get to shops in time.

So what’s next? Forgive me for being gloomy, but I prefer to look at the current situation in the UK from a ‘worst case’ perspective: To start with, there could be a shortage of some types of food, namely some meats, vegetables and recently Warburtons (a British industrial bakery) announced that it temporarily stops the production of crumpets at two of its plants). If you then think to drown your sorrow with a few pints of beer, think again: Due to the same shortage of lorry drivers, your barley pop may not make it to the pub or your supermarket.

So, to take your mind off things, you may settle down in front of your computer and start ordering your Christmas presents for friends and family, but, as everyone has the same idea, warehouses and shelves will empty quickly – and taking into consideration the lack of shipping containers and the backlogs in ports around the world, you may be shown a message that your goods will not be available anytime soon (container shipping times from China to Europe are at the moment some 70 days rather than the 30 to 40 days it takes normally). And don’t order anything electronic, as the shortage of microchips means that the Asian manufacturers quite possibly can’t even produce the coveted device, let alone ship it. Apple warned already at the end of July that the lack of chips could affect iPhone production.

But then you might want to stock up on jumpers, gloves and scarves instead: Although there is enough natural gas available, this is getting ever more expensive, which is going to potentially raise quite substantially the cost of heating our homes this winter. So rather than checking your bank balance before turning-up the dial on your thermostat, you may want to consider putting on an extra layer of clothing. Or just stay in bed altogether, maybe listening to The Smiths’ tune ‘Panic’ (one line in the song goes ‘will life ever be sane again’), as with all the above prospects it is hardly worthwhile getting up anyway.

One lesson we all can take away from the current crisis is that we mustn’t become complacent in whatever we do. We take fully stacked shelves in our supermarkets and products available at a mouse click for granted. The pandemic and, in the case of the United Kingdom, Brexit have shown us, once again, how fragile our complex systems and supply chains ultimately are. For Nassim Nicholas Taleb this might even qualify as a ‘black swan’, an event so rare that it is almost impossible to prepare for it. But then again, this situation is a cumulation of oversights and bad decisions by the powers that be. And just maybe this also is a good opportunity for all of us to take a step back and assess the complexity of our lives in general – and then we should all maybe just ask ourselves whether we haven’t lost some fundamental values along the way.

And then someone press that reset button and let‘s start all over again….