Here's everything you need to know about the global supply chain crisis

Global supply chains are creaking.

Global supply chains are creaking. Shortages of everything from raw materials to cars are nearing historic levels. Shipping rates have risen to multi-year highs, and consumers face delays and price increases that will stretch beyond the year-end holiday season. Much of the demand is in the U.S., where shoppers seem to have an endless appetite as the economy stages a comeback. Meanwhile, the supply is primarily in Asia, where many countries – chief among them China – still confront lockdowns and a rocky recovery out of the pandemic. That’s created tensions across global trade channels, manufacturing hubs and logistics networks. How companies and policy makers work through these challenges that are now weighing on growth will be critical. Bloomberg columnists Brooke Sutherland, Daniel Moss and David Fickling joined Tom Orlik of Bloomberg Economics to discuss where the pressure points are and factors at play, how industrial firms are responding, and for what consumers need to be prepared. Here are the edited highlights of their conversation, moderated by Bloomberg Opinion’s Anjani Trivedi.

Trivedi: All the demand is in the U.S., and much of the supply comes from Asia. What have you seen with shipping and logistics on the trade front?

Fickling: If you look at trade volumes, the trend growth in global trade volumes — which tends to go up at a fairly constant rate — basically stopped in 2018 with the Trump trade wars. Before the big macroeconomic disruption of COVID, there was this macroeconomic disruption of a sort of fairly unprecedented stock in trade volume growth. There’s yet another cycle, which is these very long cycles of overcapacity and under-capacity you see in the shipping container industry.

At this point, the world’s container shipping fleet is the oldest it’s been since 2008. So they’re really not kept up even without what’s happening with the rebound from COVID. With the shift away from services to goods in consumer spending, we still don’t really have a shipping fleet or a shipping infrastructure that’s fit for purpose. The slowdown of trading in the Trump trade wars to some extent covered that up. Now, we’re staring it in the face.

Trivedi: When we think about pricing power for U.S. industrials, what do we actually see in the numbers?

Sutherland: Generally profit margins were fine, and I think a lot of that did come down to pricing power. We’ve just seen really incredible pricing power out of these industrial companies. They’ve also gotten very creative in terms of rerouting goods to less clogged ports. One trend that’s just started in the last couple of weeks is we’ve seen a number of U.S. companies take steps to bring more of their supply chains in-house by vertically integrating. One that I thought was really interesting was American Eagle acquired two logistics companies outright, which is highly unusual for such a specialty retailer in the U.S., to be buying logistics companies. But they wanted more control over their operations to be able to offer affordable same-day, next-day delivery and compete with the likes of Amazon and Walmart, which obviously have much bigger logistics operations.