Sahil Bloom Profile picture
Sep 27, 2021 19 tweets 6 min read Read on X
By now, you’ve probably heard that global supply chains are in a state of disarray.

Here's a simple breakdown of what’s causing it: Image
1/ There's a lot of talk right now about the global supply chain crisis.

@business published an article subtitled "Inside the Brutal Realities of Supply Chain Hell”—it's getting serious.

This thread provides my (very) simple framework for understanding the key drivers:
2/ First off, what are the visible impacts of the crisis?

Product delays (good luck getting appliances before 2022), product shortages (see semiconductors), port buildups (fly over LA and you'll see), and rampant freight costs (sorry, retailer margins).

It's pretty bad. Image
3/ Global supply chains are very complex. We live in a highly-interconnected world.

A butterfly flaps its wings in Shenzhen and impacts when I receive my bike in New York. Ok, maybe not quite, but almost...

So to understand the drivers of the crisis, we need a simple framework.
4/ Let's break down what is happening using an Econ 101 classic: Supply and Demand.

Supply here refers to everything related to manufacturing, production, and transportation.

Demand here refers to everything related to consumption.

I'll walk through each side:
5/ First, demand. This one is pretty simple: it's through the roof.

Consumers are flush and not afraid to spend.

Further, lockdowns and restrictions have meant more spending on goods vs. services.

So you have a ton of demand for goods--those goods need to come from somewhere!
6/ Next, supply. This one is more nuanced.

The major supply drivers I see here:
(1) Factory shutdowns
(2) Port shutdowns
(3) Flight reductions
(4) Container ship challenges

Hitting each one quickly:
7/ COVID Factory Shutdowns

Factories—particularly in Asia—have had a tough time managing and containing outbreaks of COVID.

This leads to delays and bottlenecks in production. If an upstream manufacturer is delayed, that impact cascades downstream and has an extensive impact.
8/ COVID Port Shutdowns

Ports have experienced similar challenges—any have had to shut down or restrict labor to avoid outbreaks.

If ports are closed, products can't flow smoothly through the supply chain.

It's like creating a kink in a hose and watching pressure build. Image
9/ Flight Reductions

It's news to most people, but about 50% of air cargo flies on passenger flights.

It's a great revenue stream for passenger airlines.

But with travel—especially international travel—reduced by COVID, there was a significant reduction in air cargo capacity. Image
10/ Container Ship Challenges

The Ever Given clogged the Suez Canal in March, causing a backlog whose impact cascaded through global supply chains.

There aren't enough large container ships to meet all of this demand and containers are in the wrong places at the wrong times. Image
11/ So looking at all of this through my simplistic framework, here's what I see:

On one end, a structural surge in demand for goods.

On the other end, a number of significant supply challenges and disclocations.

Demand up, supply down.
12/ The net impact: sharp shipping and production price increases, shortages, and massive delays.

For consumers, this means rising prices, as these rising supply chain costs are passed through.

Your holiday shopping may be a whole lot more expensive (and late) this year... Image
13/ I hope this simple breakdown helps you feel more well-informed about what is happening with the global supply chain crisis.

Follow me @SahilBloom for more threads on business and finance.

I also write about these topics in my newsletter. Subscribe! sahilbloom.substack.com
For more on the supply chain crisis, I recommend following @EytanBuchman @man_integrated @typesfast—all are way more in the weeds and well-informed on these topics.

Also, these articles are great:

wsj.com/articles/germa…

wsj.com/articles/cargo…
By the way, if you’re looking for Christmas presents that you can get at a reasonable price, I hear Evergrande has some really nice half-finished apartments on offer at a deep discount… Image
Looks like a lot of people are flocking to Evergrande offices to take advantage of this limited time opportunity! Image
There are a few other supply-side factors that folks correctly mentioned that I will plan to cover in my newsletter piece tomorrow.

• Labor Shortages
• Infrastructure Deficiencies
• China’s Energy Crisis

Join 35K+ others and subscribe today so you don’t miss it.
Newsletter deep-dive is live in your inboxes and ears. Read, listen, enjoy, and share!

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More from @SahilBloom

Oct 8
The fastest way to improve your life is not adding new things to serve you, but quitting what no longer does.

Here are 9 things I quit to transform my life: Image
I quit focusing on my potential. Image
I quit complaining. Image
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I think the whole “alcohol is poison” thing is too black and white.

Social connection is one of the most important factors for your physical health.

If having a beer with your friends promotes that connection, good for you.

If it doesn’t, also good for you.

The point: Do you.
I’ve personally reduced my alcohol consumption about 90-95%, but if I’m with a new or old friend and they want to share a drink of something special, I’m in.
Further, as a society, I think that we should worry less about the couple of beers we drink per month and more about the fact that we stare at phone screens all day, argue on social media with strangers, consume too much sugar, and are far more sedentary than our ancestors.
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Jul 26
John Wooden was a treasure trove of wisdom.

My favorite piece of Wooden wisdom: 9 promises for a life well-lived.

These 9 promises create the foundation for happiness and success: Image
1. I promise to talk health, happiness, and prosperity as often as possible.

Your thoughts and language shape your reality. Choose them wisely.
2. I promise to make all my friends know there is something in them that is special and that I value.

It's a shame that we wait until a person's funeral to say all of the nice things we thought about them.

When you think something nice about someone, tell them.
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Jul 21
People obsess over the Hamptons but ignore the fact that this is 90 minutes outside NYC in Northwest Connecticut.
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Please don’t community note me, the realtor swore this was legit.
Added bonus: You don’t have to sit in 8 hours of traffic on a single lane road to get there.
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Jul 17
I'm thrilled to announce that my first book—The 5 Types of Wealth—is officially ​available for preorder​ everywhere books are sold!

I believe this book is going to change millions of lives. Its ideas have already changed mine...

So, what is ​The 5 Types of Wealth​ all about?

It's about rejecting the default and living life by design.

It's about realizing that your wealthy life may involve money, but in the end, it will be defined by everything else.

In this book, I offer a new way for you to think about your life centered around five types of wealth:

• Time Wealth
• Social Wealth
• Mental Wealth
• Physical Wealth
• Financial Wealth

A new way to measure what matters, make better decisions, and design your life around the pillars that truly create lasting joy and fulfillment.

Importantly, this book will not give you the answers. It will give you the right questions, so that you can uncover and act on them.

While the lens through which you view them will be individual, the stories, questions, ideas, and tools contained in this book are universal.

No matter who you are, or where you are on your journey, this book is for you.

If you’ve enjoyed any of my work, you’re going to find immense value in this book. I guarantee it.

My humble ask: Preorders are extremely important for the success of a book—retailers use the data to determine buys, placement, and more—so I'd be truly grateful for your support as I continue on my mission to create millions of positive ripples in the world.

Order today: the5typesofwealth.com

If you reply and share this tweet, I'll personally message you my thanks and a few ideas I think you'll enjoy in the book. No automations, just me, because real impact is personal and human.

P.S. I'm also offering a bunch of bonuses for anyone who preorders one or more copies (a video series, access to a monthly live AMA/office hours, and a virtual book club appearance). Drop your order number in the portal on the website to access those bonuses.Image
I used to make fun of my Dad for buying People Magazine at Hudson News to read on planes.

He just got the last laugh. Image
This is pretty cool. Thanks @grok! Image
Image
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Jun 17
The silent productivity killer you've never heard of...

Attention Residue (and 4 strategies to fight back): Image
The concept of "attention residue" was identified by Dr. Sophie Leroy in 2009.

The idea is simple:

There is a cognitive cost to shifting your attention from one task to another. When our attention is shifted, a "residue" remains and impairs our performance on the new task.
It's relatively easy to find examples of this effect in your own life:

You get on a call but are still thinking about the prior call.

An email pops up during meeting and derails your focus.

You check your phone during a lecture and can't refocus afterwards.
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