How COVID Hysteria Has Annihilated Worldwide Supply Chains

From computer chips and cars to shipping containers and plastic cuts, shortages are everywhere. Since March 2020, the COVID pandemic has stretched global supply chains beyond their limits. By now, however, the supply chain should have recovered. Not only has that not happened, in many cases it has gotten worse. Why?

Change in Demand

Change in habits can easily explained some of the shortages. People are staying home significantly more than ever before. Work at home has skyrocketed and people are taking out instead of eating at restaurants. Not all of these changes, however, are organic. Once schools closed, many people had to remain at home to take care of children¹. In addition to schools closing, many local governments prevented public gatherings including church and all ‘non-essential’ business².

Government lockdowns have forced consumers into new habits that will take years to fully recover³. Is the long recovery time a sign of fragile supply chains or is there something else at play?

Shipping Debacle

Regardless of where you live, virtually everything you purchase is made somewhere else. An intricate web of trains, trucks, and ships keeps shelves full and factories humming. Normally this web easily manages the different rules across international boundaries. However, with ever changing COVID regulations, compliance is difficult to impossible. Ports around the world have closed and/or denied entry to container ship. These rolling blockages continue to disrupt production and perpetuate shortages⁴.

Chip manufacturing is one of the hardest hit industries. Since the initial shutdown of chip factories, many have increased production. But supply of chips is highly inflexible due to the tremendous cost of building new factories. Before COVID several mega-trends like 5G and a switch in wafer size (200nm vs 300nm) pressured production. Include COVID and the global shipping mess has only made things worse⁵.

Domino Effect

When most people think of chips, they usually think about computers or smart phones. However, chips are part of many products like appliances, medical equipment, and automobiles. A disruption in shipping hurts chips, which in turn affects car manufacturing. GM announced in July that automobile production would halt due to a severe lack of chips. Toyota struggles too. They announced that COVID closures and the chip crunch has affected production deeper than the already reduced expectations⁶.

Mandates

Thankfully most nations have eased lockdowns and restrictions in 2021. But one major item lingers that may be as harmful as the original government lockdowns: vaccine mandates. Unlike the lockdowns, governments are turning to employers to enforces mandates. This disturbing shift means that people risk losing their jobs with little to no recourse. Not only is this tragic for workers that refuse to comply, but it will continue to cause shortages of workers.

Firing medical staff for not complying with mandates is the most extreme and troubling developments on 2021⁷. Less than a year ago, the media and the government were praising medical workers as heroes⁸. Many of them worked grueling hours in short-staffed hospitals saving the lives of countless people. Prior to the rollout of the vaccine, these nurses voluntarily worked in high risk environments treating patients with severe cases of COVID. This sad tale is a lesson in how arbitrary and destructive mandates can be.

Mandates are currently driving shortages and certainly will continue to drive shortages both in labor and materials. These shortages will continue to worsen, especially as vaccine mandates come into affect in the trucking industry. Many are scheduled in the next several months right as people buy more for the holidays⁹. With the pending mandates and existing backlog, it would take a miracle to avoid severe shortages during the holiday seasons.

Conclusion

The global supply chain is one largest and robust industries in the world. However, since the beginning of the COVID pandemic, government action has damaged production and distribution of virtually every manufactured product. These heavy handed measures were implemented without regard to the business or economic costs. As a result, businesses and consumers have suffered the consequences. Instead of recognizing the impact, governments continue to wreak havoc with vaccine mandates. The mandates will continue to annihilate supply chains and perpetual shortages.

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