Inflation, or a rapid increase in prices across an economy, happens when too much money is chasing after too few goods and services. The Supply Chain might be compared to perfectly spaced dominoes falling exactly as they should. Until they don’t.
The plight of the Evergiven, a G-Class container ship that became wedged in the Suez Canal, is a perfect metaphor for many of our supply chain problems. We have new demands and new technologies finding old or completely missing infrastructure. In the case of Evergreen Marine’s new ships, “G” stands for gigantic. These ships can handle over 20,000 cargo containers. The Japanese-built Evergiven flies the flag of Panama, but it cannot travel through the Panama Canal because it is too large to fit into the locks. Mega-size container ships also need a deep-water port to dock.
So, because ships like the Evergiven cannot get through the Panama Canal they must either make a journey around Cape Horn—which is both long and frequently stormy—or they limit themselves to those deep-water ports capable of berthing them. That means that mega container vessels coming from a Pacific Rim country need to find a berth at one of three west coast deep water ports–Anchorage, Los Angeles/Long Beach, or Seattle/Vancouver. Oakland’s largest ship to date carried about 19,000 containers. Once the ship arrives, it must be unloaded. The cargo must be inspected and processed. The more cargo, the more work. Work that people must do at the port. Can you see the bottle-neck forming?
It is not just a chain of events that gets slowed down. Remember the chicken shortage of 2021? Poultry processors had to shut down so they could re-align equipment. When workers stopped working shoulder to shoulder, they stayed healthier. But that also meant that fewer people could work in the same square footage at the same time.
Sometimes the problem is packaging. At the beginning of the Pandemic milk processors had to switch from institutional packaging that fit into a cafeteria dispenser, to grocery store cartons and bottles. There was plenty of milk, but not the right package for the grocery shopper.
Then there is opportunism, or more accurately, profiteering. During inflationary times some unscrupulous operators will use the opportunity to raise their prices even if they have not had an increase in their costs. For example, two years ago I paid around $9.00 to park in an Uptown Charlotte garage for around sixty minutes, but today that cost has doubled. The owner has not changed. The facility has not been improved. The garage remains attended by cameras only, and individuals pay using the same machine as they did last year.
So how do we address this confluence of circumstances? The same way we work the kinks out of a delicate gold chain we wish to wear—carefully and patiently. Two qualities that are also in short supply these days.