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How to Prepare Supply Chain Bottlenecks & Inflation

Posted by Advocate Debt Relief Team

3 months ago / July 11, 2022

The general perception is that the supply chain issues we’ve had over the last two years are in the past. Unfortunately, this is not true. Many factors have hindered an effective restart of a healthy supply chain, which could impact inflation. Know what the issues are and how to prepare.

The Problem

The Port of Los Angeles and Long Beach in Southern California are the busiest hubs of inbound goods we buy daily. Responsible for 37 percent of all containerized imports with Asia and 21.7 percent of all exports, these ports are bottlenecked. As retailers bulk up for back-to-school and holidays, goods are piling up with no way to get to consumers. The central contention has to do with labor contracts.

Dockworkers

Thousands of union dock worker contracts across the West Coast will expire soon. Dockworkers claim they haven’t been given a significant pay increase in years and are often pressured to work more overtime than their union counterparts. Preemptively, the Biden administration created a Supply Chain Disruptions Task Force to address short-term supply chain issues. The task force’s effectiveness is yet to be determined, given that contract negotiations will likely not reach a deal before the deadline.

Railway Workers

The Brotherhood of Locomotive Engineers and Trainmen is planning to ask members to strike against the nation’s freight railroads. About two-thirds of more than 28,000 rail containers have been waiting for more than nine days to be picked up, which could only be the beginning. Almost two years of unsuccessful negotiations have led to the backlog, affecting more than 30 railroads. The White House is expected to intervene, but if an agreement isn’t met, the cost of goods could elevate significantly.

Truckers

The ripple effect from the ongoing dock worker union disputes also impacts outbound goods to consumers. Truckers handle roughly 70 percent of U.S. freight. More than half of the truck gates at the Port of LA are not being used. The problem is inconsistent staffing and operating hours at the port terminals and distribution centers outside the port. Before the crisis, truckers could pick up the goods in the early morning and store them in truck yards until warehouse space opened up; however, vacancy in this sector is running thin.

Warehouse Space

Further clogging up the supply chain is the lack of warehouse space in Southern California. Real estate in this sector is at a premium, with vacancy rates as low as 1.6 percent. Usually, the vacancy rate is about 5 percent, but the influx of goods coupled with labor issues to transport the goods to consumers has exacerbated the problem.

How to Prepare

When these issues will be fixed are unknown, but should they continue, goods will be at an even higher premium. Although many factors contribute to today’s inflation, the supply chain is one key component. The situation might look bad today, but it won’t last forever. Make a few adjustments, and you’ll be ready if supplies become more scarce or wildly expensive.

Stay Calm & Be Practical

It’s easy to go overboard when preparing for supply chain shortages. No need to panic; take a few extra precautions. Be practical with what and how much you buy. Make sure you’re purchasing non-perishable items you’ll use no matter what happens with inflation or supply chain shortages.

Storage & Deals

Before you go buying overstock, be sure to clear space for the goods. Many people have an unused attic or garage space, which can be problematic. Areas like this likely won’t have a controlled climate, exposing your goods to extreme heat or cold. Food items can spoil, pressurized cans explode, and plastic can melt if it gets too hot or cold.

Search for deals. Don’t pay premium prices for goods you’ll keep on a shelf for a while. Buying in bulk often yields the best deals, and coupon shopping has never been made easier. Many apps and websites are dedicated to finding discounts and providing coupons. With enough effort, you’ll be able to get goods you usually buy at a discounted rate and have them tucked away for when you need them.

Other Essential Goods

When we think about supply chain, food is the first thing on many people’s minds. Remember the toilet paper crisis during the pandemic? Think about other peripherals like nutritional supplements, extra clothing, medicines, paper goods, and ways to filter or purify water.

Fortify Finances

High-interest debt is the greatest obstacle to being sustainable during a high inflationary period due to the lack of goods. This should be a top priority if you have credit card balances or variable interest loans. Whether or not you have enough food and non-perishable items, bills still have to be paid. You’re throwing money away when a good percentage of your funds go to monthly minimum payments that don’t even touch your principal balance.

If you’ve tried to bring down the balance of your high-interest debts without success, help is around the corner. At Advocate Debt Relief, we can help you craft a plan that gets you financially out of the woods and into a sense of security.

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Filed Under: Economics Finance