From war to bird flu, there are about 101 reasons food shortages are expected to worsen, but there are other aspects of the supply chain that are showing signs of stress and impending collapse as well. Even if we ignore the whole Russian invasion of the Ukraine, what is going on in China with their lockdowns is enough to cause massive disruptions, much as it did during and after the epidemic.
In fact, many would argue that these supply shortages were one of the two driving forces behind inflation. (The other was the U.S. government and Fed pumping trillions of dollars into the economy.) Well, get ready for the sequel.
Supply Chain Failure, Take Two
While most Western countries are moving beyond COVID, China continues to enforce its zero-tolerance policy, locking up individuals who test positive and locking down more than 400 million people. The result is the workshop of the world is producing far less than it used to. Those few items that are being produced are not moving because they shut trucking down. Cargo ships are not getting loaded and are not sailing because they locked the ports down. Approximately 40 percent of China’s total economic output is shut down because of their latest Omicron outbreak. Unless China realizes that the lockdown is doing it irreparable economic arm and pissing off its populace and abruptly changes its policy, this shutdown could last for weeks or months.
All those yellow dots on the map above are cargo ships around Shanghai, China’s biggest city. The round dots signify ships that are not moving. The arrows give you an idea of what direction the ships are moving. Look at the expanded view below, and note how very few ships are moving away from China.
If you thought the supply chain disruptions were bad in 2020 and into 2021, you ain’t seen nothing yet. If you want to explore this yourself, go to shiplocation.com and zoom in on the east coast of China. Then compare these pictures to the ships around Taiwan or South Korea’s Port of Busan. Far more of the ships there are underway, coming and going, picking up and delivering goods. Then look at the ports of Long Beach and Los Angeles. Far fewer vessels at anchor there. Our backlog is clearing up while China’s is growing.
COVID was a Warm Up
Do you remember those shortages during the later stages of COVID-19? When the country was trying to get back to work, but there was a shortage of parts and equipment, where you couldn’t get something repaired because a part from China was on back order? We’re going to see that again this summer and fall, but it will be worse this time around.
The good news is that the entire world isn’t shutting down again. There will still be pulp from South America to make diapers and toilet paper. Bananas and other fruit from South and Central America won’t be affected. Factories in Mexico will be up and running, at least as long as they don’t need sub assemblies from China. Even high tech chips from Taiwan will still ship, but the more common chips from China won’t. While we will get some deliveries, there is a long list of things produced in China that will go out of stock.
This shutdown will affect consumer electronics, computer components and memory, automobile parts, clothing and footwear, industrial components such as wiring harnesses and pumps, video games, and even plastic resin and rubber pellets that are used to manufacture other goods. Then there are the minerals, the metals and other commodities that china exports. Even if they don’t come here, taking steel, aluminum, lithium, and other materials out of the market for a month or two will create scarcity and drive up prices.
Three to Six Months
Right now, there are still items in the pipeline, on containers waiting to be unloaded, and in warehouses. But in three to six months, the pipeline will have been drained and the shelves will start looking empty. This will coincide with food shortages as the winter wheat failures hit our grain supplies, compounded with shortages caused by the war.
If you plan to buy something this summer, from solar panels to a water filter, my advice would be to buy it soon.
The window for stocking up is already being squeezed by inflation. A year ago, you could get 20 or 30 percent more food and prepper gear for your dollar than you can today. But even that’s better than getting nothing, which may be the case in the second half of the year.
It Could be Worse
We are not in a shooting war with China or Russia, bur that could change. If Russia attacks a NATO-member country, or if China invades Taiwan, expect the above scenario to not only get worse, but to last for years.
Worse yet would be if one side of some conflict uses nuclear weapons, either intentionally or by mistake. Even the use of a small tactical nuke could have massive repercussions on the global economy and trade. That would make a bad situation worse.
So buckle down on your preps, plant your garden, and plug any holes in your pantry. We are only four months into 2022, and history may show they were the best of the year.