TODAY'S SHORTAGE OF MAJOR COMPONENTS

 

      …Port of Oakland freighter waiting off-shore for a birth at the Oakland Harbor

Auto and semiconductor shortages is only a couple of the nation’s shortage items.

Today's increase in demand is driven by people who couldn’t travel, go to the movies or, for a time, go out to dinner.  So they redirected that spending into shopping, the experts say.  All those purchases are being felt at the Port of Oakland, where traffic this year is up 26% from 2020, and it may set an all-time record for the number of containers processed.

There is so much shipping, port spokesman Robert Bernardo said, that it is creating “a global traffic jam.” On a recent day, the port had eight ships at berth, meaning docked where they could be loaded or unloaded. Six ships sit at anchor in the bay, waiting for a berth and 14 are waiting further off shore for a spot to even anchor, a wait that could take a couple of days.

Any American customers hoping to pick up a new fridge or living room sofa, looking to buy a new car or even a videogame console could be in for a long wait.

Asked if the shortages meant shoppers would have to wait weeks for their new dishwasher or dryer, the president of the local University Electric Home Appliance Center, (where we shop) said that he was woefully not optimistic.  “Months and months. It’s not weeks and weeks,” Heintz said. “Weeks and weeks would be like, woo, let’s celebrate, and open the champagne.”

This same individual posed for a photograph for the local newspaper, in front of an empty spot that normally would have a display range.  This is not a big national brand store.  This is at a family owned, home appliance store in Santa Clara, Ca.  Customers are having to wait months for orders on new appliances to be filled, all due to widespread product and supply shortages.  

Those long waits are the new reality across the economy because of what business owners and experts say is the “perfect storm” of increased demand driven by COVID-imposed work from home.  This is coupled with cracks in the global supply chain that have made key products and materials much harder to get. Goods that were previously readily available or only a week or two away are now out-of-stock, discontinued or only shipping months after being ordered.

“I don’t think most people living today have seen anything like this,” store president Heintz said. “We’re not used to this. We’re used to Amazon.  We order it, it comes tomorrow. In the appliance industry, that’s not going to happen.”

On the demand side, business owners said people who kept their jobs during the pandemic, many bolstered by stimulus checks, went shopping for all kinds of products. Heintz estimated national demand for appliances was up 700%.  He said customers typically come in when appliances that had been limping along finally stop working. Not anymore.

“I have never sold more appliances to people whose stuff wasn’t broken, than last year,” he said. “COVID days it’s like, ‘Well our washer sounds a little funny I think we need a new one.’ ”

That’s the same in furniture, according to Tom Giorgi, owner of Giorgi Bros. in South San Francisco.

“This is my family business. I’ve been doing this for 25 years,” he said. “The last 9 to 12 months have been the busiest they’ve ever been.”

Now that amped-up online shopping is running headfirst into widespread supply shortages, at a time when virtually anything could go wrong with the global supply chain.  Well, it has gone wrong.

For example, a COVID-19 outbreak at the Port of Yantian in China earlier this year held up as much as 5% of all global shipping.  This is according to Hellenic Shipping News, while outbreaks in Malaysia and Taiwan are affecting semiconductor chip manufacturers.  Demand for shipping containers means the price of shipping one from China to the US has gone from about $1,200 to as much as $6,000, CNBC reported.

This is also because many US semiconductor companies moved their manufacturing off shore instead of keeping it here in the U.S.

Shortages of semiconductors have been particularly disruptive in a world where cars, workout bicycles, thermostats, telehealth tools and countless other products rely on chips, said Peter Leroe-Muñoz, senior vice president of tech and innovation at the Silicon Valley Leadership Group.  Semiconductor manufacturers haven’t been able to keep up with demand, and many large consumers in the U.S..  This is particularly the case for auto manufacturers whose increasingly computerized vehicles rely on chips,  They didn’t stockpile any and reduced their purchases in anticipation of a COVID-driven downturn.  A downturn that never materialized.

“It revealed the fragility of supply chain networks around the world because so much of the semiconductor manufacturing takes place beyond our shores,” Leroe-Muñoz said. “Those foreign countries are struggling with COVID and struggling to maintain their own production of these chips.”

Car shortages have gotten so bad some vehicles purchased during the pandemic are worth nearly as much, and in some cases, even more than when they were new. The shortage is driving efforts by the Biden administration and a bipartisan group of senators to invest billions of dollars in domestic chip research, development and manufacturing, Leroe-Muñoz said.

The chip shortage is also affecting the appliance industry, where chips are used for gas igniters, Heintz said. Even the popular Sony PS5 video game console, which has faced major shortages because of a lack of semiconductors.

But it’s not just technology,  A major freeze in Texas, coming on the heels of COVID-induced manufacturing delays, crushed production of “resin”, a plastic used in many products including as a foam to insulate refrigerators. A lack of petroleum-derived foam has even affected the furniture business because there’s nothing for stuffing sofas and chairs. Giorgi said a custom, high-end sofa that would normally take 10 to 12 weeks to produce is now taking nearly three times as long.

This just shows that semiconductor shortages is just one of hundreds of products that are taking twice to 10 times as long as it took even a year ago.

And no, this problem isn’t going away soon.

Copyright G. Ater 2021