Demand Surges, Supply Sputters, And Deliveries Are Long Overdue
A significant backup of container ships off the Pacific coast is becoming very personal for untold Idahoans and consumers across the U.S., particularly if they’re wondering where their long-overdue deliveries have been. The whipsaw effect on the global trade system has triggered an unprecedented delivery back-up on everything from automotive parts to bicycles.
“I’ve talked to a couple of local Treasure Valley bike shop owners, and they cannot get bikes in,” said Dr. Jim Kroes, professor at the College of Business and Economics at Boise State University. “And when they get them, the demand is instant.”
Kroes visited with Morning Edition host George Prentice to talk more about why more Idahoans should be paying closer attention to the backup, and how port traffic might be a very good economic barometer.
“What we're going to see is, I think as the summer progresses, even more shortages in some of these household goods.”
Read the full transcript below:
GEORGE PRENTICE: It is Morning Edition on Boise State Public Radio News. Good morning. I'm George Prentice. The distance between Boise and the Port of Long Beach is about 900 miles. But what's happening off the coast of California is something that we should probably know a bit more about. And we're going to do just that. Dr. James Kroes is here. He is a Supply Chain Management Professor and an Ada Burke Fellow at the College of Business and Economics at Boise State University. Dr. Kroes, good morning.
DR. JAMES KROES: Good morning. Thank you for having me.
PRENTICE: Could you give us a sense of what's happening at these ports, particularly on the West Coast?
KROES: Sure. Last year when COVID hit, there was a dramatic decrease in imports in the United States. And recently, as the economy started recovering, there's been a huge surge in demand from consumers for household goods. And consumers aren't spending money on the services like they used to. So, they're spending their money on retail household goods. And that spike in demand has led to a dramatic increase in the number of imports coming to the ports. And that's coupled with labor shortages due to COVID restrictions at some of the ports and other issues, such as a lack of warehouse space…and just general congestion at the ports has really slowed down - the efficiency of the ports, ability to get goods off ships and through their system and into consumer's hands.
PRENTICE: So, economics, to a layperson, is a bit of a reach… but this gets really personal really quickly. I'm assuming these are things that that we're ordering online and expecting to be on our doorstep in a day or two.
KROES: Yes, for sure. And jst to give you a personal anecdote, I have talked to a couple of local Treasure Valley bike shop owners, and they cannot get bikes in. And when they get them, the demand is instant. And it's kind of hit-or-miss when things are going to show up. So, there's been a lot of impacts for those kinds of goods for consumers here in the Treasure Valley.
PRENTICE: I am fascinated by this, in that…and you must know this better than most: You can't turn the world's economy off, and then suddenly turn it back on and expect some instant return to normal. And that's what is, physically being played out off the ports.
KROES: And the ports definitely are having issues. But another contributor is: there's a shortage of truck drivers in United States. So, they just can't get trucks and chases to get goods moving. And then when COVID hit, the railroads, significantly decreased their service. And that has not returned yet. Unfortunately, railroads have seen when there's more demand and they have supply for they can charge higher rates. So, they've been slow to return back to the levels of pre-COVID railroad service to get the containers out of the ports as well.
PRENTICE: My guess is, if we paid a bit more attention to the ports and this type of traffic, we might have a better barometer of our economy.
KROES: You know, you can kind of look at the dramatic spike in imports coming to the States, especially through the West Coast. It's all mainly product from Southeast Asia, and really shows that spending is way up. Unfortunately, exports are down at the same time. So, it's probably not going to help the trade deficit, but it definitely shows that people are spending money at a level they weren't over the past year after COVID started.
PRENTICE: Dr. Kroes, we’ve got just a couple of minutes left. I always want to take advantage of the opportunity when I'm talking to a professor: I'm curious about the level of engagement with your students under this cloud of the pandemic. I'm wondering: How are they doing? How are you doing? And what is their level of anxiety, or maybe excitement, about taking the world on and everything that the world has to throw at them?
KROES: That's a great question. I've been teaching online for the last year, and honestly, it's a struggle. It's not the way I like to connect to students. Yeah, I'm teaching a professional MBA class… and they all have jobs. Most of them are gainfully employed and they're pretty optimistic and feeling pretty good about things. For my undergraduates, who are soon to graduate, they are really struggling. The job market hasn't picked up yet and there's definitely a lot of nervousness and anxiety on their part, as they're trying to finish up their academic careers and start their professional careers.
PRENTICE: He is Dr. James Kroes from the College of Business and Economics at Boise State University. Dr. Kroes, thanks so much for making sense of this. We're going to pay a lot more attention to the ports. And best of luck to you and even more good wishes for your students.
KROES: Thank you very much, George. I appreciate you taking the time to speak with me.
Find reporter George Prentice on Twitter @georgepren
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