Re-Engineering Our It’s time for a coherent national logistics system, regulating and coordinating what has been privatized. BY DAVID DAYEN
Since the supply chain shock hit the public consciousness last summer, we keep reading ubiquitous and premature media reports using the word “easing.” In November, the Los Angeles Times assured us, “Cargo Jam at L.A. and Long Beach Ports Begins to Ease,” as did Forbes. “Supply-Chain Problems Show Signs of Easing,” The Wall Street Journal added later that month. New York magazine even cobbled together “6 Signs That the Supply-Chain Crisis Is (Slowly) Ending.” But despite another wave of these stories in December, celebrating Christmas presents getting into the hands of children, the delays, shortages, and rising shipping costs we’ve seen for nearly two years remain very much in evidence. Manufacturing CEOs believe snags will last through 2023. And retailers are raising their prices in anticipation: IKEA announced a 9 percent increase, while the biggest food manufacturers made plans for price spikes on everything from Campbell’s soup to Jell-O pudding. Risks to the supply chain, established 58 PROSPECT.ORG FEB 2022
through decades of perverse policy decisions made by both parties, will always be with us, unless there’s a course correction. The biggest catalyst now is the strong transmissibility of the omicron variant, creating labor shortages and local lockdowns that hinder production and transportation. But because of how we built our supply chain, virtually any well-timed disruption can cut off a vital source of components or finished goods. It’s an engineering flaw, where single points of failure cascade all the way to store shelves. You can make a credible argument that extreme weather drove more supply chain issues last year than COVID. Not only can flooding, hurricanes, cold snaps, and droughts reduce commodity supply through crops spoiling or lumber going ablaze, but they can generate power outages that snarl production, or storm surges that shutter ports and trucks. And these will only grow in frequency and intensity as the climate heats up. Meanwhile, because so much production is concentrated in individual factories, risks
have escalated. A fire at a Japanese semiconductor plant last March removed a chunk of global chip production at an already fraught time. A second fire in Berlin just after New Year’s hit a plant run by ASML, a Dutch firm that makes the machines that make most semiconductors. The main chip fabricator, Taiwan Semiconductor Manufacturing Company (TSMC), sits on a contested island China claims as part of its mainland, and its status is precarious until that settles. And global production of raw materials is so razor-thin that political unrest in Kazakhstan, the world’s largest supplier of uranium, sent commodity prices soaring. Pandemic or no pandemic, “supply chain disruptions will continue to happen both more frequently, and with potentially larger magnitude,” McKinsey’s operations co-lead Dan Swan told Axios in November. You solve that only by rebuilding redundancy and resiliency. That means taking down the policy tyrannies that have forced reliance on faraway manufacturing
