The COVID-19 pandemic has warped global supply chains, leading to product shortages, shipping delays, disruptions to manufacturing and soaring consumer prices that are fuelling concerns about persistently high inflation. Bottlenecks throughout the global manufacturing and transportation system are the result of changes in supply and demand.

Over the past 20 months, COVID-19 health protocols have caused factory shutdowns around the world and labour shortages in key transportation nodes, such as ports in China and the West Coast of the United States. A series of natural and man-made disasters – a fire at a large semiconductor plant in Japan; a massive container ship getting stuck in the Suez Canal in March – have compounded the problem.

The flip side of the issue is a surge in demand, buoyed by pandemic stimulus from governments and central banks. With North American consumers spending less on vacations, restaurants and live entertainment during the pandemic, demand for durable goods – furniture, electronics and sporting gear – has soared.

Most of these goods are manufactured in Asia and shipped to Canada and the U.S. via container ships. The huge demand for container shipping has pushed up transportation prices and strained the capacity of ports to process incoming goods. Further inland, trucking companies and warehouses are scrambling to manage the unprecedented influx of container shipments, while wrestling with their own labour shortages.

Manufacturing supply chains that were built around just-in-time delivery of parts have been knocked sideways by shortages and delays. Retailers are having to rejig their logistics to deal with the boom in e-commerce. The inability of companies to forecast volatile consumer demand during the pandemic has led many to stockpile and over-order, straining warehouses.

In Canada, these issues were exacerbated recently by extreme flooding in British Columbia that washed out and damaged railways and highways, effectively cutting off the Port of Vancouver from the rest of the country.

Read the full article on the Globe and Mail website.