NewsNews FeaturesUncategorized

Athens Businesses Are Dealing With a Broken Global Supply Chain

Pizza boxes are among the many items local businesses are having a hard time acquiring. Credit: Sarah Ann White

Shop early, don’t get bent out of shape if what you want isn’t available, and try to buy local—that’s the advice of Athens business owners trying to cope with a tangled global supply chain.

“This is the first of many times we’ll ask you to please shop early for your holiday gifts (and to be flexible when we suggest alternative options if the first book you’re seeking is impossible for your neighborhood bookstore to get),” wrote Avid Bookshop owner Janet Geddis on the store’s Facebook page. “We thought the supply chain hiccups last year were bad, but this year it’s far, far worse.”

Lori Lord, owner of Promotional Marketing Services, is also advising customers to plan as much as a year ahead. Her company sells custom branded corporate marketing products—swag such as the pens and magnets handed out at company events or large family gatherings, and the umbrella you might get at a golf tournament. Lord’s entire industry is experiencing “severe” product shortages, she said. Production times, once seven to 10 days, are now three to four weeks.

The supply chain meltdown isn’t affecting just delivery times, but prices, she said. Shipping costs from China, where many of the items Lord markets are made (as are many of the books in U.S. bookstores), have skyrocketed, and the prices of some raw materials have also climbed because of real or artificial scarcities. “Plan for six to 12 months ahead,” Lord said. “Be patient, and be flexible,”

Avid and Promotional Marketing Services are far from the only businesses caught in the broken global trade web. Restaurants have had to deal with sporadic shortages of hot sauce, pickles and chicken wings, the New York Times reported last month. The cost of the lumber needed for a 2,000-square-foot house jumped from $7,000 pre-pandemic to $27,000 this spring, although lumber prices fell somewhat since May, according to a June 17 White House report.

Thanks in part to the surge in online shopping that accompanied the spread of COVID-19 and the COVID lockdowns that made Amazon billionaire Jeff Bezos even richer, there’s a shortage of corrugated containerboard—the stuff liquor boxes and Amazon shipping boxes are made of. That means Little Italy owner Frank Cortese can no longer count on speedy delivery when he orders more pizza boxes, which are also made of containerboard. “When you place your order, you don’t know when you’re getting it,” he said.

To compensate, Cortese puts in bigger orders to ensure he won’t run out waiting for the next shipment. He’s also paying more for boxes, for plastic cups and other supplies. “Everything’s doubled in price,” he said. “It’s affecting everyone, that’s for sure.”

Cortese, a vintage car hobbyist, had to wait a month and a half to get a carburetor for his 1968 Chevelle, he said. Some kinds of auto parts have become hard to find, said Masters Garage owner Bryan Berrong. That’s especially true if the part involves a computer chip. Car manufacturers and some other kinds of businesses cut back on their orders of chips last year, anticipating an economic downturn as COVID spread.

Thanks in large part to expanded federal unemployment benefits and aid to business, U.S. consumer demand didn’t wane, but increased. Car sales showed the largest year-over-year increase since 1974, and by the beginning of summer, inventory at car dealerships was half what it was pre-pandemic, according to a June 17 report on announcing the formation of a “Supply Chain Disruption Task Force.”

But without enough chips, automakers can’t build cars. That’s led to higher new-car prices and unprecedented price tags on used cars. The price for a one-year-old used car has now “reached parity” with new-car prices, according to Consumer Reports: You’ll pay just as much for a year-old vehicle as for a new one. Meanwhile, car manufacturers are reducing output. Toyota announced last month it would cut production by 40% in September.

Though “significant,” the supply issues “are likely to be transitory,” according to the June White House report. Three months later, no one is predicting a quick turnaround, however. The crisis may actually be deepening. Some analysts believe the snarl will continue not just into next year but into 2023, Bloomberg reported last week.

Multiple factors have combined to create “a perfect storm,” said Athens Area Chamber of Commerce Director of Sales Marissa Chastain. “A shortage of truck drivers that was building long before COVID has left Chicago warehouses full, for example, and because Chicago is a central hub for railroad transport, there’s no room for the goods still arriving at busy ports, such as the Long Beach-Los Angeles complex, where there’s not enough dock workers to cope with a record volume of incoming ships,” she said.

Greed has also played a part. Container shippers are on track to haul in $100 billion in net profits this year, up from about $15 billion in 2020, Bloomberg reported. According to one report, shipping from China has become so lucrative that shippers are actually returning from U.S. ports with a cargo of empty containers rather than waiting to fill them up with U.S. goods for export—one of the factors creating a global shortage of shipping containers.

Some economists say the disruption could lead to diminished global trade, less reliance on “just-in-time” manufacturing, more reliance on local or regional supply networks and more domestic production of vital goods. The Biden administration has promised to boost domestic production of computer chips.

Lord is one who’s looking to rely less on international trade. “We’ve made a lot of effort finding USA products,” she said.