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Nicklaus: From cars to candy, the world's supply chains are snarled

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LA, Long Beach ports will issue fines for backlogged cargo

Cargo containers sit stacked at the Port of Los Angeles last month in San Pedro, Calif. 

Dan Abel Jr. can’t get a shipment of dried fruit until next summer, and he’s not sure when he can replenish his supply of white chocolate.

Abel, who calls himself chief chocolate officer for the Bissinger’s and Chocolate Chocolate Chocolate Co. brands, is in charge of obtaining the ingredients his family-owned company needs to produce its truffles, bars and gift-box collections.

It’s been a juggling act lately. A shipment of European chocolate that was due in May didn’t arrive until July. Some flavorings are out of stock for months at a time.

“It’s putting more stress on the manufacturing facility, mostly on the planning side,” Abel said. “A lot of times our team doesn’t know what we’re producing until that day.”

Snarled global supply chains are putting similar stress on companies large and small. Automakers have curtailed production because they can’t get electronic components. Industrial giant Emerson said Wednesday that logistics and labor constraints reduced its fourth-quarter revenue by $175 million.

Shortages began in 2020 as a COVID-19 story: As factories closed to stop the spread of the coronavirus, they couldn’t produce all the goods their customers wanted. Such lockdowns are still a problem, especially with semiconductor plants in Asia, but the shortages of late 2021 are mostly a demand-side issue: Consumers and businesses are ordering things faster than the world’s ships, trains and trucks can deliver them.

The bottleneck is most apparent at the busy ports of Los Angeles and Long Beach, where 70 or more ships have been anchored waiting to unload.

Panos Kouvelis, director of Washington University’s Boeing Center for Supply Chain Innovation, believes panic buying is partly to blame. “There is corporate hoarding,” he said. “Some guys get scared and they keep on ordering from multiple suppliers to make sure they get what they need. I would say the level of orders in the system is twice as high as underlying demand.”

Kouvelis is optimistic that the supply-demand imbalance will sort itself out by next summer. “By the middle of 2022, the supply chain should be looking better,” he said. “My hope is that as people start getting deliveries, they will cancel their extra orders.”

Caitlin Murphy, chief executive of St. Louis freight forwarder Global Gateway Logistics, is less optimistic. She sees structural issues that need to be resolved, including a shortage of truck chassis for moving containers off the docks, and says U.S. ports are behind other parts of the world in automation.

President Joe Biden’s recent announcement that the ports will operate around the clock “is helpful, but it is putting a Band-Aid over a bullet wound,” Murphy said. “I think it will continue at this level of port congestion until some of the bigger short-term and long-term solutions are implemented.”

At the candy factory, Abel has had to scramble several times to solve supply-chain emergencies. He found a new printer for a Bissinger’s catalog, for example, when the company it had been using couldn’t get enough paper.

Bissinger’s and Chocolate Chocolate Chocolate also are sacrificing profit margins to make sure holiday-season goodies are in stock when customers want them.

The company is holding extra inventory of key ingredients, splitting orders among multiple suppliers and ordering some materials earlier than usual. Heart-shaped boxes for Valentine’s candy, which usually wouldn’t arrive until after Christmas, are already in the warehouse.

“It’s tying up space and tying up cash but it’s a necessity for us,” Abel said. “We’ve had to rewrite the supply chain rules in a very short amount of time.”

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