The Pandemic Continues to Screw Up Supply Chains
Some of that was due to hoarding and some was due to disrupted transportation systems. But some of the shortages are a lot more complex than that. They result from shifts in demand.
The shortage mentioned in the picture above is a good example. Actually, there is no shortage of aluminum but a shortage of aluminum cans. People are not going going to restaurants to drink soda, or bars to drink beer. Instead they are buying canned beverages to consume at home. Manufacturers were caught flat-footed, resulting in a shortage of cans.
This has hit local breweries particularly hard. They've lost business at their brewpubs, so to stay afloat they've turned to canning their products. But they are competing with the brewing and soft drink giants, who are themselves struggling to meet increased demand.
Now It's Cars
In the latest example of supply chains getting hosed, there is a shortage of computer chips needed to build cars. This has forced Ford to close one of its plants in Germany for a month.
Why is there a shortage of car chips? Because people are buying fewer cars during the pandemic. Some people have lost their jobs, and people in general are not traveling as much. Sales last April were down by around 50%. That means much lower demand for car chips.
At the same time, demand for consumer electronics has surged. So if you're a chip maker, you're going to switch your production away from the market that is sagging and toward a market that's surging. This is all it takes to create a shortage of chips for building cars.
This illustrates how complex and fragile our supply chains are. An unexpected shift in demand caused by the pandemic can really screw up the system and cause shortages.
