by Kerry Lutz
Financial Survival Network
Nike Who would believe that the American staple of sneakers has fallen victim to the supply chain disruption? Nike has been hit by a number of supply chain issues including shipping container shortages, port backlogs, and a lack of workers—which will likely lead to a shortage of Nike products. The company warned customers on a recent earnings call that the production and delivery of its goods around the world would be reduced through at least the spring of 2022.
Bicycles As a result of the lockdowns, bicycle demand hit the roof, and they became extremely hard to find. It seems as if Americans rediscovered their love affair with two wheelers. This was a healthy past-time activity due to its inherent social distancing nature. It was expected that after the quarantine measures ended, bikes would again be in plentiful supply…which ended up being wrong. Cycling industry experts are predicting that bike shortages will last until at least the end of next year. It seems that there is a global component shortage, which has a knock-on effect on supplies of complete bikes.
There have been factory closures and disruptions to the supply chain since the pandemic; additionally, unprecedented worldwide demand for bikes have contributed to create an unprecedented bike shortage. Demand has never been higher, but it cannot be met in the short term—and perhaps not the long term either.
Drugs ASHP.org, a pharmaceutical tracking company, lists 192 drugs in short supply. They range from Albuterol inhalers to lidocaine, belladonna, and opium suppositories. It’s important to note that this is an incomplete list and that many more items are actually in limited supply and haven’t yet been reported.
Hotel Housekeepers If you haven’t stayed in a hotel lately, you might be surprised to discover that daily room cleaning has become an opt-in service. Due to a shortage of housekeepers, hotels are cutting back on guest services while continuing to increase prices. I just encountered this exact situation on a recent trip to New Orleans. They would only clean my room if I stayed a minimum of 4 days. According to industry sources, demand for rooms has picked up faster than housekeeping staff members have returned back to work. Some insiders fret that the return to normalcy could well off into the future.
Hospitality Textiles Shortages of bed linens and towels have sent hotels scrambling for new supplies. This, combined with labor shortages at commercial laundries and staff shortages at in-house linen cleaning departments, is causing hotels to extend the life cycles of their linens. Supply chain and labor shortages are making it much more difficult to properly run hotels in the post-pandemic world.
Snow tires There’s an acute snow tire shortage building up just in time for the winter driving season. The pandemic caused tire factories to shut down for several months. When they resumed production, they started producing all-season tires first. Making specialty lines, such as snow tires, were put on the back burner. Thus, shortages have resulted and Canadians who experience much more extreme winters than their US counterparts are going to bear much of the brunt. Perhaps retreading will come back in Vogue.
Underwear This appears to be a UK phenomenon for now, but shortages have a knack spreading well—like certain viruses. Cotton prices are up 40% year to date. They appear to be facing a shortage of knickers and pajamas across the pond. Whether this is related to Brexit or just another post-pandemic shortage is not certain, but don’t be surprised to see it hit locally. Most underwear is produced in Asia. With port delays and congestion, this could be another shortage about to go critical.
Paper There’s a global paper shortage that promises to get worse over the coming weeks and months ahead. Fortunately, very few Americans read anything anymore—printed or otherwise—so that’s helping to alleviate the problem. But in all seriousness, according to the Seattle Times, “The paper market … is extremely tight. It has seen numerous price increases going through. It wouldn’t be surprising if there were further increases …”
The Times further states, “The recent squeeze marks a major shift for a sector upended in recent decades by the internet. Although mail-order catalogs used to be a mainstay of American shopping — consumers could once buy entire houses from the Sears catalog — demand for paper has been declining in an increasingly digitized world, spurring many paper mills to shift course. In fact, direct-mail marketing declined so much between 2008 and 2015 that the Direct Marketing Association changed its name to the Data & Marketing Association in 2017 before it was acquired by another trade group. But print has been slowly making a comeback. In 2018, even internet giant Amazon added a physical toy catalog.”
Increasing population is more than making up for the technologically driven decline in paper consumption. Because demand had been slipping, investment in the sector hasn’t kept up, and now the world is experiencing capacity constraints exacerbated by the pandemic response.
As the situation evolves, we’re seeing more and more items become scarce. When production is shut down for 3 months and then a bunch of newly created fiat currency units are pumped into the banking system, what other result would one expect? In addition, businesses large and small are using the situation to push through price increases in an effort to make up for lost purchasing power.
The shortages we’re now experiencing could be as transitory as the inflation we’re currently enduring. Time will tell.