As economies opened up after Covid lockdowns, and families were able to get back outside again, the U.S. economy expanded at a record annual rate of 33.8% from July through September 2020, most recently registering a 6.5% annual growth rate from April through June this year. Companies were overwhelmed with orders they couldn’t meet.
The domino effect, the cost of raw materials went higher, way higher. The price of oil is up more than 70%, aluminum 55%. Tin prices have doubled. The price of high density polyethylene blow-molded plastic — common in bottles, fuel tanks, industrial drums and other products — is up over 157%.
Also overwhelmed, Freight skyrocketed as companies tried to book shipping containers. The Baltic Dry Index, which measures shipping costs, has risen more than 700% since mid-May 2020.
Of course, US ports were overwhelmed when the cargo arrived.
The stress on the supply chain breakdown is effecting many businesses. Many manufacturers can’t get parts and are facing delays in getting parts. Deliveries that used to take a week now takes three or four weeks.
Not helping, the Chinese manufacturing center Shenzhen — was shut down for a month by a resurgence of COVID cases in late May.
Freight charges are up in the United States, but not like the crushing cost of shipping containers. This may help some Made in America brands that relied on US only parts. U.S. companies are looking for alternatives closer to home. According to McKinsey, supply chain disruptions are becoming more common.