How Could Supply Chain Disruptions Affect You?

What's Causing the Supply Chain Disruption?

There's no straightforward answer here, partially because today's global supply chains are so complex. But here are some of the intertwined factors leading to the disruptions and delays:

• The pandemic: The pandemic is the overarching reason for supply chain disruptions. Outbreaks and lockdowns limited productivity in factories and the transportation of goods around the world. At the same time, consumer demand for certain products has increased as many people have more disposable income and spend more time at home.
• Just-in-time (JIT) manufacturing: The JIT manufacturing model serves to meet demand instead of creating a surplus before an item is needed. While it can lead to cost savings and reduced waste, the practice also means manufacturers don't keep extra supplies on hand. As a result, the delay of a single component can stall an entire production line—such as when, earlier this year, Ford had lots filled with nearly complete trucks awaiting semiconductors.
• A lack of shipping containers: Increased demand and a limited supply have led to a shipping container shortage and big jump in costs. Partially, this is because PPE supplies were shipped to parts of the world that don't have many exports, and the containers were left there, sitting empty. The Independent Commodity Intelligence Services reports that it cost $20,000 to ship a 40-foot container from Asia to the U.S. in September 2021, up from $4,500 the previous year.
• Staffing shortages: In addition to pandemic-related closures, some employers that have kept operating are having trouble hiring enough staff to get the job done. Notably, there's been a multiyear shortage of truck drivers in the U.S.
• Overwhelmed docks: Increased activity and worker shortages are also leading to delays at U.S. ports. For example, while the Port of Long Beach set records for the volume it moved in July, August and September, it may still take weeks (instead of days) for containers to be picked up by a truck—which only adds to delivery delays and a shortage of available shipping containers.

There were also one-off events, such as the blocked Suez Canal, that added stress to the already overwhelmed global supply chain. While governments and companies are working to clear things up, you could reasonably expect the disruptions to continue well into 2022 or even 2023, according to logistics experts.

How Could the Supply Chain Disruptions Impact You?

Shortages can affect businesses and consumers alike. The exact impact will largely depend on the specific products you want to buy, but you might notice:

• Rising prices: Climbing demand and reduced supply can lead to cost inflation on products and services.
• Longer wait times: You may have already heard the warnings: Don't wait until the last minute to do your gift shopping this year. It's likely that shipping times will be longer than usual, especially for in-demand products.
• Limited availability: There may also be outright shortages. Consumers worried that a medication or other products they need will be hard to find might buy more now to prepare. Having extras on hand could be helpful, but widespread panic buying could exacerbate supply issues (remember the toilet paper crisis of 2020?).
• Increased scams: High prices can attract fraudsters and scalpers looking to make a quick buck. And added pressure to quickly buy products before they're out of stock could make many people prime targets. Be extra cautious about protecting your identity and avoiding scams this year.

If you have the financial means, you may want to look for alternative products or services that don't rely as heavily on a global supply chain. For example, get fresh fruits and vegetables from local farmers by subscribing to a community-supported agriculture (CSA) box, or look for local small businesses and artisans that you can support while gift shopping this year.

What Can You Do if You're Struggling to Pay Bills?

As disruptions ripple throughout the economy, the cost of a variety of products and services may increase. Plus, there may be limited availability for budget options.

Inflation can be particularly difficult to manage if you are already struggling financially. But there are a variety of approaches you could take to try to offset the higher cost of living:

• Ask for a raise. Employers may be more inclined to agree right now, particularly if they're struggling to find and retain good workers.
• Look for ways to save. There are many ways to save money, from negotiating lower rates on cable or internet services to using cash back apps when you're shopping online and in stores.
• Hold off on major purchases. Consider waiting to make major purchases, such as a car or new appliances. When deciding your course of action, however, know that there's a risk that supply shortages get worse before they get better.
• Make at least your minimum payments. Even when you're having trouble managing your debt, it's important to at least make the minimum required payment to avoid late payment fees and to keep a late payment from hurting your credit. If this seems impossible, however, reach out to your creditor before the due date to ask if there are any hardship options available.
• Connect with a credit counselor. If you need help with a budget or creditors, you can also contact a nonprofit credit counseling agency to discuss your options. You may be able to get free or low-cost assistance.

As always, keeping tabs on your credit report and score can be an important part of managing your finances. It can help give you a sense of your options if you need to borrow money, and let you know if someone is trying to open an account in your name.