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Shortages — the new normal

From ketchup to chlorine tablets for swimming pools, to semiconductors for autos and electronics, it seems that every day we are confronted with a new shortage attributed to the COVID-19 pandemic.

These shortages are triggering price increases as Wednesday’s consumer price rise of more than 4% confirmed, and this, in turn, has us worried about a major increase in inflation.

Some restaurants can’t get packets of ketchup to slather on our French fries, so we wind up getting a small container with the condiment.

The chlorine shortage resulted from a swimming pool-buying boom last year when people were stuck at home. This increased demand for chlorine caught the industry flat-footed. On top of that, a major chemical plant fire in Louisiana disrupted the supply chain.

Trying to get the vehicle of your dreams? The world is in the grips of a global chip shortage because of demand for semiconductors surging far beyond capacity. Semiconductors are required for a wide variety of consumer goods beyond automotive components, including smartphones, laptops and Playstations. Many electronics need these chips, and this supply chain is much more complex than for, let’s say, toilet paper.

If you have been contemplating constructing a home or a do-it-yourself project, I don’t have to tell you that lumber prices have exploded in recent months, and suppliers have struggled to keep up. Much of the industry has been reeling since the Great Recession a decade ago, and it slowed down production accordingly. Those sawmill closures aren’t easy to reverse in the midst of a housing boom spurred on demand and historically low interest rates.

Remember Murphy’s Law? Whatever can go wrong will.

Aside from normal disruptions in the supply chain, some unintended or unexpected events give us that piling-on effect that just makes everything appear worse.

During the early days of the pandemic, we were frantic to get Clorox wipes, hand sanitizer, toilet paper and other staples. Our hoarding caused major supply-chain disruptions and a lot of anxiety.

In late March, when the Ever Given container ship choked off traffic in the Suez Canal for almost a week, it sent shock waves around the world. Of course, anytime there is a shortage, you are sure to see prices shoot up.

The ransomware attack last week on a major oil pipeline distributor that feeds 45% of the supply of gasoline, aviation fuel and other oil products to states along the East Coast and southeastern and southern states, sent prices skyrocketing even beyond the jump caused by the Suez Canal blockage, so we are looking at the highest gas prices in years.

The Colonial Pipeline is the largest system for refined oil products in the country, stretching 5,500 miles and carrying 3 million barrels of fuel daily between Texas and New York.

We are beginning to see panic buying and lines forming at gas stations as motorists fear they will be left without fuel. Some stations, most notably in the southeastern states, are running out of gas, which may require the government to help with emergency supplies. The good news is that we are told things probably will even out within a week or so.

Getting back to the Suez Canal blockage, companies were in panic mode as hundreds of ships carrying everything from coffee and cattle to toys and furniture were delayed. Experts estimated that every hour traffic remained stuck cost the global economy more than $400 million in lost trade.

Supply chain expert Martin La Monica, deputy editor for science coverage of conversation.com, said he is shocked at how surprised we are with these disruptions.

“If nothing else,” La Monica said, “the COVID-19 pandemic should have made it abundantly clear how easily a disruption in the supply chain or a sudden increase in demand for a product can lead to empty grocery store shelves and other problems that might directly affect you.”

What is even more troubling is that La Monica predicts that things will likely get worse before it gets better.

The pandemic shows that in addition to things like toilet paper, other monthslong shortages can occur with food, personal protective equipment, pharmaceuticals and ordinary household items.

The Suez Canal blockage that began on March 23 will probably take until the end of the month or longer until most of these backups are relieved.

La Monica said there is no big mystery why this is occurring. “The fundamental problem behind each of these disruptions is simply the inability of modern supply chains to adjust when something goes wrong, even briefly,” he said.

He pointed to one major issue - lack of flexibility. While consumers were having trouble tracking down toilet paper because of panic buying and hoarding, La Monica said there were plenty of rolls sitting in warehouses but intended for offices and restaurants. “Companies had trouble diverting the toilet paper to the retailers, which kept only a very lean inventory,” he said.

Supply chains are “lean and mean” for reasons of cost and efficiency, not resiliency. “As customers demand ever cheaper products delivered faster, supply chains have given up every bit of slack. As a result, a disruption of any magnitude creates significant consequences through product shortages and rising prices,” La Monica said.

By Bruce Frassinelli | tneditor@tnonline.com

The foregoing opinions do not necessarily reflect the views of the Editorial Board or Times News LLC.