The Shipping Crisis Made Simple
The Shipping Crisis. The Global Shipping Crisis.
You hear it nearly every day now. Your favorite product has gone up in price and when you ask why, the answer you get is “The Shipping Crisis”.
And an immediate question comes to mind. Why not just… wait a few days longer to get the product? Why does it come out of your pocket?
Hopefully I can illustrate this using some diagrams and examples that make sense. I’ll keep the math to nice round numbers, but they’re pretty close to the real ones.
Pre-Shipping Crisis, there was a nice established model and order to things that hummed along like beautiful clockwork. Let’s take a simple sample product. A board game. In the established production model, a factory sources multiple products that they turn into the game. Cardboard, plastic, packaging. That’s those three big arrows going to the factory. The factory got the raw materials and turned it into that game you’ve been waiting for. This continued on the track, going to a retail store, fulfilling through KickStarter, a mail order catalog, a middle man distribution company — it really doesn’t change this overview. You, humble consumer, finally obtain that product which has passed through one or more distribution channels. Simplest form — you went to the store and bought your game.
Looking at our first diagram, each section exports it’s product and the next imports it. Raw Materials exported by their creator are then imported by the factory and so on. Each line of text in that diagram adds a little markup for profit, and each arrow is some shipping company doing the same.
Somewhere along the line, COVID hit, and many months later, the price is being paid due to The Shipping Crisis. Let’s dissect some of the steps on how and why.