Delayed Christmas gifts just the beginning of supply chain problems
As supply chain snarls cause inflation and delay shipments, many Americans worry that their holiday gifts won't arrive in time. Articles with titles like "How the delta variant stole Christmas" note the difficulties facing consumers, who have gotten used to a world where one-click purchases arrive in a couple of days. The Biden administration has responded to these concerns through such efforts as getting the port of Los Angeles to run 24 hours a day.
Biden himself has held news conferences with the CEO of Walmart and other business leaders to respond to public worry that “parents won't be able to get presents for their children this holiday season“. Industry groups have even called for the Navy to help unload shipments to make sure clothes and shoes arrive in stores in time for the holidays.
But the supply chain has bigger problems than unhappy consumers who don't have enough gifts to unwrap under the Christmas tree. Many consumer goods are produced by transnational supply chains that circle the globe, accounting for 80 per cent of the $20 trillion in global trade each year. US imports from Asia alone are worth approximately $1 trillion, while just two per cent of the nearly 20 billion garments Americans purchase each year are made in the United States. These supply chains rely on "just in time" production and logistics. As climate change proceeds, they are likely to get more brittle, leading to increased disruption in global trade. Workers are increasingly unwilling to accept the low wages and precarious conditions that the current economy requires.
In other words, Christmas isn’t the only thing being challenged. It's the entire system through which the world makes and transport things.
"Just in time" manufacturing is widely held to have originated in Japan with the Toyota Production System in the 1960s. It involves manufacturing goods or components and delivering them to the next link in the chain just when they’re needed, so that inventory never sits unused in a warehouse. Stationary goods lose money; goods in motion are profitable.
When just-in-time supply chains work, pundits admiringly compare them to great symphonies. Assembling a single iPhone requires components from at least 43 different countries. Tim Cook, Apple's CEO, famously believes that "inventory is evil" and was originally hired to fix Apple's supply chains.
But these chains can be fragile. When there’s a single breakdown, as when a port in China has to close due to a coronavirus outbreak, the fact that each link depends on all the others can mean that the entire process grinds to a halt.
Furthermore, just-in-time requires a lot of flexibility. If companies are acutely sensitive to consumer demand, production needs can vary 80 per cent from week to week. Often that means precarious conditions for workers, who can never be certain how long their jobs will last. The global pandemic has only exacerbated this. In some countries, 30 percent of garment workers abruptly lost their jobs last year.
Workers may also endure unsafe conditions. Federal safety and health investigators are investigating the collapse of an Amazon warehouse in Illinois when it was hit by a tornado, killing six people. (Amazon founder Jeff Bezos owns The Washington Post).
While views on the ethics of such intricate supply chains differ, independent evidence increasingly reveals that they are unsustainable. Workers are increasingly refusing the low wages and dangerous working conditions that just-in-time logistics require. For example, trucks carry more than 70 per cent of the value of all freight transported within the United States. Yet US employers cannot hire enough people to drive trucks, contributing to supply chain snarls.
It's easy to see why people aren’t attracted to trucking. Just-in-time logistics contribute to poor working conditions, in which the efficient movement of goods the moment they're ready can keep drivers idle and waiting hours for products to be packaged. Because many of these drivers are treated as independent contractors rather than full-time employees, they are not paid for the time they have to spend waiting for loads. Even though drivers are more productive than ever, they are paid about 40 per cent less than they were 40 years ago, and often need to go into debt to rent or buy their own trucks. The annual turnover rate for truckers driving for larger companies is now 92 per cent, meaning that fewer than one in 10 people driving will still be driving for the same firm next year.
The current system of logistics and transport may be environmentally unsustainable, too. Just transporting cargo around the world accounts for about 10 per cent of annual global emissions. Production, too, has consequences for global warming. Global apparel supply chains alone produce as much as 10 per cent of annual global emissions, while extreme weather makes global interdependence less reliable.
All this suggests that supply chain disruptions aren't a short-term problem. They signal a more fundamental and long-term crisis. The ways in which corporations organise global production are increasingly unsustainable for workers and the environment. Furthermore, these problems can't just be understood in terms of whether consumers get their Christmas presents - or anything - on time. The politics of supply chains are likely to stay in the headlines as workers, climate activists, consumers, corporations, governments and others with a stake in this system struggle over this structural crisis for years to come.
Benjamin L. McKean is associate professor of political science at Ohio State University and author of "Disorienting Neoliberalism: Global Justice and the Outer Limit of Freedom" (Oxford University Press, 2020).