Supply Chain Collapse: What’s Coming Next and How to Prepare

September 12, 2021
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Inflation has reached a 13-year high, caused by a supply chain broken by last year’s pandemic.  Moratoriums on evictions and foreclosures have just ended.  Rounds of stimulus money are coming to an end, and unemployment benefits expired on Labor Day.  Shipping and carrier costs have increased.  Gas and utility prices have increased.  

If you haven’t realized that the normal supply chain is failing, you haven’t tried to buy a product, good, or service requiring raw materials in a while, or you’re pretty self-sufficient and removed from the grid to begin with.  It is a fact that the global supply chain is a mess.  It continues to reel from several factors, and it’s not going to get better for anyone in the future.  Freight costs are rising significantly.  Many countries are experiencing dramatic labor shortages or can’t get shipments of raw materials to keep manufacturing going.  Existing inventories are or are nearly depleted.

Many of the City Prepping subscribers have stayed ahead of this in part because of the information we provide on this channel.  In the comments of a recent poll on the YouTube channel’s Community tab, 64% of viewers indicated they had the basics and thought they’d be okay if things got a little worse.  One viewer commented that she couldn’t find a job, so she started a huge garden, had produce coming out of her ears, had learned to can, and was drying her own herbs now too.  Congrats!  Others indicated they were learning to cook at least two or three times per week, were buying extra, or increasing their food and water reserves.  The number of people getting prepped is great, but realize that the more people prepping is also putting greater demand and pressure on emergency preparedness supplies.  Expect shortages of these, as well.

Prepping is the right approach because we are facing a shortage of so many things from beef, chicken, vegetables, and grains to electronics and even bottled water.  This video will examine why these disruptions are occurring, how long they will last, what will be in short supply, what you can expect in the future, and what you can do about it.  It’s not too late to start prepping, but you need to focus on certain things right now.  The supply chain is in shambles, and there is always the looming possibility that this disarray and these shortages of everything will become the new normal.  

So let’s jump in.

WHY THE DISRUPTIONS?

If it was a single cause, we could reasonably fix the problem, but we are at a point now where fixing it isn’t a simple matter.  Panic buying of some items has depleted already thin just-in-time inventories.  Manufacturers have for many years embraced lean production practices to cut costs and boost profits, but lean production cannot keep pace with the current tumultuous inventory and raw material fluctuations.

Cyberattacks disrupted food and fuel supplies and inventories this year.  Transit issues through the Suez canal backed up deliveries and available containers forcing many manufacturers to slow or completely stop production while consumer demand was rising.  Coronavirus-related closures slowed or stopped production and shipping in some industries at the same time that lockdowns dramatically shifted consumer spending habits.  Consumers spent the money they would have spent on travel and dining out on tangible goods like home appliances, furniture, electronics, and home improvement materials.  That surge in new spending resulted in thin inventories being depleted and a rise in orders at the same time the supply chain was crawling and gasping along.  E-commerce has risen exponentially as the world is forced to shrink its horizons.

In the US, imports are way up, almost 50% volume increase year-over-year, but containers and ships are in short supply.  All US ports are experiencing congestion.  Import fees to ocean carriers are easily five times what they were last year, so importing businesses are experiencing a massive price increase.  It’s not just in the United States, either.  This is a global shortage.  Asia to Europe container freight rates are up 500% from a year ago.  No matter where you live in the developed world, your country’s dependence on other countries for raw materials and finished goods has you solidly buckled in the front seat of this global supply chain stutter and perhaps even coming collapse.

The profits earned by some companies by off-shoring in the last several decades failed to factor in freight, congestion, a low number of containers, and a tremendous increase in critical freight costs.  Some companies are seeking to reshore their operations now, but it takes time to build infrastructure, build factories, and staff them during a time when wages have remained low for the last several decades.  2023 will see the next significant delivery of container ships, so more capacity is on the horizon.  Many manufacturers in the far east are building the container boxes to ease that shortage, but that won’t net any resulting positive impact for several months if not years.  The fact is that many countries import much more than they export, and it is not cost-effective to ship empty containers.  This has been a problem for many years, and it is why many places have an abundance of useless, empty containers, even blocking the ability to receive new shipments in some cases.  It was a cute problem before that led many to repurpose cheap shipping containers into homes because countries didn’t want them back.  Now, though, with supply lines so strained and world economies trying to recover, shippers are finding that they can’t get distribution ramped up because of this container shortage sufficiently enough to meet consumer demand.

Further complications like natural disasters like hurricanes hitting the Port of Louisiana, one of the top 20 ports worldwide, can delay and divert cargo, further exacerbating the problem.  According to the American Trucking Associations (ATA), the industry was short 60,800 drivers as of late 2018, that only got worse with the massive shift in consumer spending, spiking demands in some markets along with troughs in others, and each of the other supply chain hiccups along the way.  When the news breaks about recent crop failures like California’s tomato harvest, expect panic buying to spike other food sectors.  Each blow is a blow to the supply chain even as it’s been knocked down and is struggling to regain its footing.  The fact is that the supply chain is in shambles right now for a multitude of reasons, and no corrections are large enough or swift enough to alter the current course swiftly sufficient to avert massive cost increases.  

SHORTAGES OF ABUNDANCE

A relatively new phenomenon of the recent disruptions is shortages of abundance.  That is to say that the item may be plentiful globally, but your area isn’t receiving it, and it may feel added pressure on supply because of panic buying and hoarding activities.  We saw this with the toilet paper panic of 2020.  Retailers, distributors, manufacturers, and wood pulp makers had all finely tuned their production and sales to the precise needs of a population.  When thousands of people bought up a year or more supply of toilet paper in the same week, shortages became a reality.  The deficit then gave fuel to more panic buying, and it took several weeks for supply levels to restore themselves.

Some parts of the country are seeing this right now with limits on a liter and gallon containers of water.  This is partly due to panic buyers and fear of the coronavirus’s new Delta and Mu variants.  It’s also due to a little bit of a plastic shortage and manufacturing and transportation costs driving up production costs.  The panic buying exponentially increases the inventory shortages and forces retailers to impose limits.  Water of all kinds, such as bottled or water packaged in 1-gallon jugs, has been the first item to run short.  Costco, Krogers, Winco, and several other chains are already limiting the number of cases or jugs of water customers can buy.  Pre-cooked or prepared meals are another favorite buy that is quickly going.  The inventory shortage isn’t because water is in low supply.  Watch the panic buying continue if the Polyethylene Terephthalate, or PET, the plastic used to make the bottles, has any hiccups in its supply chain.  Any raw materials sourced from Brazil, China, or Mexico could cause disruptions due to the ravenous consumer demand.  Any natural disaster like a hurricane hitting Corpus Christi, home of MG Chemical, which produces 1.1 tons of PET per year, could exacerbate the current shortage.

We saw this in real-time this year with a potato chip shortage and a chlorine shortage.  The chip shortage was caused by workers striking for higher wages.  The chlorine shortage was due to a manufacturing plant in the US catching on fire.  The microchip shortage was due to massive consumer demand accompanied by a drought in Taiwan and shipping disruptions.  The rise in meat prices is due to more people eating at home, cyberattacks, and COVID-related processing plant closures drying up frozen inventory.

In some cases, the rapid depletion of inventory and the too swiftly ramped up production results in a dramatic decrease in quality, as quality control measures are surrendered in the name of fulfilling order demands.  I recently took delivery of three, very expensive electronic components to review on my YouTube channel only to discover that they weren’t working.  I hear from many manufacturers I deal with that they simply can’t get their hands on ceramic filters, steel, wire, plastics, motherboards, or computer chips that they need to make their products.  There are quantities on hand, inventory, active production, and raw material components.  If any of those four pillars of the supply chain fail, the actual product may be in abundance, but it will never get to your store, home, or table.

THE NEW PREPPER MINDSET

If you haven’t been prepping for a while; if you are just now realizing that the government might not actually come in and rescue you; if you are just now realizing that you have to start doing for yourself; if you are just now buying what you think you need to have to sustain yourself, first of all, welcome, and second you’re not alone.  Thousands and thousands of people are waking up to these sad realities and buying up supplies of grains and water.  That’s the reason for the limit on water bottles.  This frenzy of buying activity coupled with the rising production and distribution costs causes both shrinkflation and inflation.  That results in more panic buying, and the cycle continues.

It’s not just food, too.  New preppers tend to favor hoarding activities at the beginning of their journey until they can understand and secure what they need for their ongoing survival.  People ordering or shopping for everything from generators to freezer units to aluminum cans to canned vegetables and soup are beginning to see shortages.  These shortages feed demand, and demand feeds more shortages.

If you are new to prepping, make sure that you understand prepping is much, much more than simply hoarding.  Regardless of when you started prepping, realize that the demand for goods you may seek to get in your supplies is increasing daily.  You may need to find alternate solutions.  Stay informed and stay ahead of the demand desires of the common herd.

BRACE YOURSELF

Retailers and manufacturers are warning that the supply chain is in horrible shape right now and that retailers and consumers should expect further shortages throughout the next year and possibly longer.  This will not only translate to low inventory but will result in increased demand.  Low inventory and high demand mean only one thing– exponential price increases.

Some of the shortages you can expect in the next few months are tomatoes.  The massive drought in California — the country’s biggest tomato producer — will make tomato yields short by about 5% to 10%. This means the price of everything from marinara sauce, salsa, and ketchup could be on the rise.  While the ketchup packet shortage was pandemic-induced, this shortage will translate into a very real price increase in every product that uses tomatoes.  However, this shortage has a direct natural cause we can track back and point to as the reason for the price increase.  All food prices are up over last year– meat, milk, and eggs, to name just a few.  Furniture, appliances, clothing, and gas are all up over 10% and even more in some areas of the country.

Expect shortages in personal protective equipment, especially if the new variants continue to spread.  Expect shortages in electronics of all kinds, especially if the chip shortage continues.  Expect shortages of any foods imported from Brazil, as there is a shortage of pesticides coming from China, their leading supplier.  Toyota announced it would slash its global production of cars by 40%, and they’re not the only car manufacturer reducing output.  Construction companies are paying more for paint, lumber, and hardware while waiting weeks and sometimes months to receive what they need.

Inflation has reached a 13-year high, caused by a supply chain broken by last year’s pandemic.  Moratoriums on evictions and foreclosures have ended.  Rounds of stimulus money are coming to an end, and unemployment benefits expired on Labor Day.  Shipping and carrier costs have increased.  Gas and utility prices have increased.  This means higher costs for consumers while their wallets are shrinking and their currency is buying less and less.

Here’s my warning to you now.  It’s going to get worse, and we haven’t yet seen the bottom of this.  At the very best, and if we have no significant disruptions from natural disasters, pestilence, cyberattacks, economies collapsing or entering deep recessions, or civil unrest, we may see the ship righting itself by mid-2023, maybe.  To be safe, you should count on these disruptions lasting two years or more, perhaps even becoming the new normal.

WHAT CAN YOU DO?

I stress some of the same core things on this channel because they work.  Reducing your dependence on the lean production supply chain will benefit you now, in the immediate future, and definitely after any disaster.  Getting your personal water storage up is of critical importance.  Water is a commodity and an essential resource necessary for life.  Ensure you have enough stored for you and your family to last over 2 weeks if it stops flowing altogether.  Make sure you have the means to treat and process water to make it safe for drinking.  Implement precipitation collection systems to channel natural water to your reserves.

We also stress food as your critical prep.  When you buy one can of something for use this week, buy two and set one aside.  Cook for yourself.  Learn to dehydrate, freeze-dry, pickle, or can foods.  Start a garden, a microgreens window garden, or learn to forage from the wild.  Start supplementing your food intake with locally sourced and personally prepared food sources.  Buy in bulk, and don’t let your food go to waste, succumb to mold, or go bad.

Secure your shelter and your fallback shelter.  This can mean refinancing your house or moving to a smaller condo or apartment to reduce your expenses, or it can mean taking the plunge and buying a more rural but affordable property.  It could mean purchasing that piece of land somewhere more safe to bug out to or fall back to.  Your shelter is going to mean something different for each person.

Another thing you can do to survive the coming shortages and economic declines is to get ahead of your finances.  Now is the time to document all of your expenditures and compare them week to week and month to month.  Understand two things for yourself.  First, understand how these shortages and price increases are affecting you in real-time.  Did you just pay $5.00 more at the gas pumps this week than you did last week?  That’s not a one-off, but you might not notice if you don’t pay greater attention to the details now.  Did your utility bill increase month to month or this year versus last year?  Look for these price fluctuations and your dependence on these products and services.  Then implement the second thing– cut costs, trim the fat, find alternatives.  That may mean shopping two stores to get better prices.  That may mean cutting consumption.  That may mean changing your eating habits.  That may mean prioritizing some staple purchases over other things.  Treat your finances and spending as a prep.

CONCLUSION

Even though the supply chain is a mess and could get dramatically worse or not recover at all, you can survive it better if you start plugging in these solutions now.  Waiting for manufacturers, global captains of industry and governments to correct the faltering course of the supply chain puts your faith in others when you need to look after yourself first.  These supply disruptions will continue.  In some cases, they will get a whole lot worse.  No politician or profit-seeking fat cat is going to come to light your candle for you when the power goes out.  I guarantee you that.  

Hope for the best but prepare for the worst.  Whichever comes your way, you will be ready and will be living better.  Mentally prepare yourself for more profound disruptions and prep accordingly.  What supply disruptions have you seen where you’re at, and what do you attribute to the shortage?  Let us know in the comments below, and don’t forget to give this video a thumbs-up.  That helps us spread the word.  Whether you are new to prepping or an old hat at it, review the many videos on this channel and learn what you need to prep today for a better right now and a better tomorrow.

As always, stay safe out there.

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