By Ed Crowell
Suddenly, “supply chain” and “logistics” have joined “Go Braves” and “Go Dawgs” as some of the most uttered phrases in the state. The first two are not because of a newfound love of drivers and warehouse workers, however, nor because of a winning streak.
Logistics is a hot topic because it is suddenly a troubled area after being a part of life that has almost always worked smoothly and uninterrupted.
Historically, the myriad supply chains (there is no one “Supply Chain,” but rather countless thousands of them), coupled with reasonable inventory levels, protected consumers. At any given moment, a particular supply chain disruption, be it weather, war, poor paperwork, a broken crane, a strike – any of a hundred reasons – can create specific issues. It happens somewhere in the world daily. Because of built-in redundancies, inventories and workarounds, however, very few of those disruptions ever touch individual homes and lives. (Getting grounded in bad weather while traveling by air is one rare example.)
Today, Georgians are seeing and experiencing what happens when snags, snafus and other disruptions collide in a system where depleted inventories coupled with increased demand have left a near-zero margin for error.
The pandemic-related shuttering of factories in 2020 took place just as millions of people were suddenly working from home, out of work and locked down. People found themselves with more time on their hands and, in many instances, windfalls of cash to spend. Inventories were depleted but not replenished and, as the world came out of lockdowns, consumer demand surged on many fronts. The world’s supply chains, initially slackened and sometimes broken apart, were torqued back to high speed from the whipsawing of demand.
The consequences are being felt in pocketbooks and seen in people’s shopping carts. Spot shortages, so far short-lived, exist throughout multiple industries and locations in the state. Georgians have avoided the sort of panic buying and hoarding that led to the Great Toilet Paper Crisis of 2020. Still, the approach of Christmas may well see something similar recur, this time with gifts and holiday food favorites.
It is likely to take 12-16 months for things to return to normal. The process will take hard work, including expanded hours of operation at various ports, warehouses and terminals, but it will also require adaptations. In the near term, Georgians will see fewer choices and reduced services, in part because these changes simplify supply chains and reduce the potential for service failures.
For products that remain on offer, more consumers will be “setting notifications”: Signing up for an alert when a product is available will become more commonplace. This, too, helps smooth demand and product flow.
Longer term, as supply chains worldwide are reestablished, repaired or reconfigured, competition will return. That competition will bring back products and services that have been temporarily shelved, so while some changes may be permanent, there is reason to expect true recovery.
There is another upside that is likely to benefit the state. Inflation and shortages are immediate results, and some higher prices are here to stay. But Georgians, in particular, can look forward to sustained growth and good job prospects. This state truly is a logistics hub. Freight volume, value and employment will ultimately benefit from the reestablishment of smooth-running supply chains. Wages, salaries and benefits will increase (indeed, they were increasing before the pandemic) to attract people to the industry.
So there is reason for hope. The current supply chain troubles are temporary, and for Georgians they bring the silver lining of more opportunities, steady jobs and better income for individuals and families across the state.
Ed Crowell, President and CEO of the Georgia Motor Trucking Association, wrote this commentary for the Georgia Public Policy Foundation. Established in 1991, the Foundation is a trusted, independent resource for voters and elected officials. The Foundation provides actionable solutions to real-life problems by bringing people together. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (October 22, 2021). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.