Beyond "why is this happening?", maybe the more important questions are "when will it end?" and "how will it end?" Unfortunately, that part seems less clear...
Yesterday @g_allon posted a great discussion of this. Unfortunately, Gad is somewhat pessimistic about the "when will it end" question--and I have to agree.…
These long queues are likely generated by high utilization. If the utilization is >100% the queues will continue to build up until something changes (demand drops, or capacity increases), as in my all-time favorite ops case, National Cranberry.
I don't think we've seen indications that demand is dropping, although if the bullwhip effect subsides that may help a bit. If demand doesn't drop, then we are left for capacity increases to work off the queue, and that is (1) expensive, and (2) has a long leadtime.
If the utilization is <100% (but still high), we may get lucky periodically and see the backlogs reduce, but still the systemic problem of congestion in a highly utilized service system will continue, and we will have periods of significant delay unless capacity or demand change.
So unfortunately I have to agree with Gad: continued shortages and delays (in logistics capacity and other parts of the supply chain as well) seem likely for the near term.

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More from @robertswinney

14 Sep
Another day, another article about how logistics capacity will continue to be short into 2022, and perhaps beyond, causing continued supply chain delays and shortages of many consumer products. How can this be, you might ask?…
This is something we'll be studying for a while. But to me, it seems like (at least) two forces at play. The first thing to recognize is that logistics capacity--like enormous container ships and ports to unload them--is expensive.
Because it's expensive, there is not a lot of excess capacity during normal operating conditions: this would be wasteful and would raise the cost of global distribution, for companies and consumers alike.
Read 12 tweets
2 Mar
Lately I've been fascinated by the persistent shortages of bicycle supply, particularly from some of the big international brands. Some brands and retailers are saying bicycle supply will remain extremely tight through 2021 and into *2022*. This is incredible!
We've seen the supply chains for some items, like N95 masks, continue straining a year into the pandemic; this makes sense, because the demand for these increased massively. The US consumed 50 mil N95s per year before the pandemic, and this has increased >10x during the pandemic.
But... demand (probably) did not increase >10x for bikes, since these are expensive items ($100s to $1000s) that many people can't afford. So why I can't I buy a Specialized bike until 2022?
Read 11 tweets

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