Big Hammer Wines has about 20% less inventory than normal these days, forcing the restaurants, retailers and online customers who normally patronize the wine seller to choose alternative brands or find another supplier.
When frustrated restaurants complain, “I keep saying, ‘We don’t have the product, we don’t have the product, we don’t have the product,” says Greg Martelloto, president of the San Diego-based company.
Some of Big Hammer’s customers pick a different brand of wine, but others bolt. “If you don’t have what they’re looking for,” Martelloto says, “they go elsewhere.”
Meanwhile, buyers hunting for a Ford Bronco, Lincoln Corsair or Jeep Compass, among many other vehicles, might need to forgo their preferred color or option package, unless they can toler
And popular electronics, such as smart speakers, may be delivered to shoppers’ doorsteps more slowly than usual, taking up to a week or more, up from a typical day or so.
COVID-related snags have delayed shipments of products and raw materials across the economy the past couple of months, pushing up wholesale costs and raising the likelihood of higher retail prices by midyear.
Behind the snarls: Some factories in the U.S. and abroad are shuttered while many others are running at partial capacity because of employee COVID cases or social distancing requirements. Ports, warehouses and trucking companies are similarly grappling with worker absences. And containers for overseas shipments are in short supply. Even the rollout of the COVID vaccine is playing a role, taking up shipping capacity and slowing other deliveries.
Such bottlenecks were prevalent when the pandemic began in early spring as factories shut down across the globe. Since then, the crunch had gradually eased. But recent COVID-19 spikes, combined with a resurgence in customer demand, have sparked the direst shortages and delays yet.
Not only have the last two months seen supply shortages develop at a pace not previously seen… but prices have also risen due to the imbalance of supply and demand,” says Chris Williamson, chief business economist at IHS Markit, a data provider.
To be sure, demand for services has dropped as spikes in coronavirus cases led many states to reinstate curbs on restaurants and other businesses. In December, retail sales fell for the third straight month and restaurants shed nearly 500,000 jobs. But Americans continue to snap up electronics and other home-based goods and their employers are still buying equipment to bolster their remote work setups, Williamson says. Companies, meanwhile, are replenishing their inventories after drawing then down substantially in the early days of the pandemic.
Containers are stacked and stored after being unloaded from ships in the Port of Long Beach.
“Demand has returned much faster than supply,” Williamson says. IHS’s index of manufacturing activity in December hit its highest level on records dating to 2007.
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Americans are also buying items such as apparel again, though they’ve shifted to the casual and athletic wear more suitable to working or lounging at home, says Sue Welch, CEO of Bamboo Rose, a provider of supply-chain software.
“People are bored with everything” in their wardrobes, Welch says.
The sales rebound has made the crunch more severe than in March and April, analysts say, when demand largely evaporated along with supply.
Higher prices on the way
The supply network, meanwhile, is clogged. Last spring, shipments from China dwindled to a dribble. They’re snapping back after that country was among the first to recover from the health crisis. In August and September, imports from Asia to the ports of Los Angeles and Long Beach increased 22% from a year earlier, according to Supply Chain Management Review. But containers are piling up at the ports, which don’t have the workers to store and move them, the trade publication says. The congested ports have increased the time it takes truckers to drop off or pick up containers.
