Global shipping and supply chains are in a mess and you might struggle to get your new mobile phone for Christmas.
As seen in this chart, more than 70 containerships are stacked up outside Los Angeles waiting to unload. Manufacturing delivery times are extended, and rail shipments are declining sharply.
COVID has disrupted supply chains in a few key ways:
- 📈 Surging demand for imported consumer goods, due to pandemic work from home trends and other home improvement spending.
- 👷️ A decline in workers required to maintain and operate these supply chains.
- 🛑 Shortages in the key components that make our favourite products
What do new PlayStations and electric vehicles have in common?
They’re getting increasingly harder to buy. The reason: there aren’t enough semiconductors to go around.
You find semiconductors at the heart of microprocessor chips as well as transistors. Anything that's computerised or uses radio waves depends on semiconductors. This increased demand, coupled with supply chain issues is causing major problems for anyone who wants a new laptop, desktop, electric-vehicle, or any internet-connected device.
What Does it Mean?
Supply chain issues aren't a quick fix.
First, the world is going to need more containers, which carry more than 90% of the world’s traded goods. Chinese companies make 95% of the world’s containers and have ramped up production. The number of containerships in service is rising as well, but not very quickly.
Electronics are going to remain expensive as the cost of semiconductors remains high due to the high demand. Semiconductors are the backbone of the digital economy, and the fix is simple to understand but difficult to do. Just make more chips.
📦 It's going to take some time, but chipmakers are already ramping up their investments and production capability. New makers are also entering the chip-making market and will help ease the future supply.