7 products harder to find today, and what it means for your money – Forbes Advisor
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Last spring, concerns about being prepared to spend indefinite time at home prompted consumers to stock up. This rush to buy has led to shortages of household products like toilet paper, paper towels and cleaning supplies.
This year we are again facing product shortages, but not primarily due to consumer hoarding. Instead, the supply chain – the path from raw material to finished product to delivery to the consumer – has proven to be more vulnerable than many of us might imagine.
The shortages we see in industries can’t be blamed on a single logistical nightmare (remember the six-day blockade of the Suez Canal?) Or a single bad actor (aka the hackers who basically shut down the transport of Colonial Pipeline fuel).
Instead, we see what Nick Vyas calls “a perfect storm of ugliness”. Vyas is executive director and co-founder of the Center for Global Supply Chain Management at the University of Southern California.
“Anything that can go wrong will go wrong,” Vyas says.
Why supply and demand are in contradiction
At the start of the pandemic, consumers began to purchase existing inventory. A year later, suppliers, manufacturers, farmers and truckers are feeling the fatigue of trying to meet demand under particularly difficult circumstances. In many parts of the world, including the United States, the trade has not yet fully returned to all-cylinder shooting.
Restarting the global economy in small chunks means we can expect shortages in various sectors, says Vidya Mani, professor of business administration at the University of Virginia Darden School of Business.
She uses the process of making a car as an example. Your car may contain parts from 10 different countries, she says, but that doesn’t mean that any of those 10 countries can produce all of the components needed to build the car. Companies in each of these countries specialize in manufacturing a few of these essential parts, and if they cannot deliver on time, production is slowing at a breakneck pace.
“When a handful of these sites are closed, the chain stops,” she says.
If a single component is missing that is needed to make an appliance or household item, it slows down overall production.
Sometimes the missing component is man, for example in the manpower required to make a product or transport it. But sometimes the missing part is physical. Take the example of shipping containers: last spring, when international trade almost stopped, one of the side effects was that empty containers were not collected and moved to where they were most. required. A year later, the shipping lines are still trying to get the containers to the ports where they need them most.
And when supply and demand become imbalanced, Vyas says, the pressure starts to build on prices. If manufacturers have to pay more for materials in short supply, they are likely to pass at least part of that increase to you in higher prices.
Read more: Should you worry about inflation?
You’ve probably noticed that the price of some of your daily purchases is going up. Here are some industries that are feeling the pinch because of supply chain issues:
There is no shortage of gasoline per se, but rather a shortage of truckers that is slowing the pace of fuel deliveries. Gasoline prices generally increase with demand during the summer months, particularly around Memorial Day and Independence Day holidays.
But delayed deliveries to parts of the country could keep prices consistently higher this summer than we have become accustomed to during the pandemic. In May, the average price per gallon hit $ 3 for the first time since 2014.
A drought in Brazil – which produces about a third of the world’s coffee beans – means harvests are smaller than usual. Additionally, two shipping issues are keeping your caffeine jerk from getting to you faster: a run on shipping containers and saved ports. The price of a pound of ground coffee increased by about 12 cents between March and April 2021, according to the Bureau of Labor Statistics.
Since increasing the amount of coffee available depends on growing more beans, it could take several years for the industry to rebound.
3. Semiconductor chips
A global shortage has made semiconductor chips hard to find, slowing production for the automotive industry, smartphone makers, and many midstream industries. The reason? People relied more on home electronics during times of pandemic lockdowns, which created demand that chipmakers couldn’t meet. They are still struggling to catch up, and since the United States only manufactures a small portion of the world’s semiconductor chips, there is a waiting period to receive new shipments. The chip shortage has been so severe this winter that President Joe Biden signed an executive order to launch a review of U.S. supply chains, including semiconductor production.
Two major diaper makers, Proctor & Gamble (Pampers and Luvs) and Kimberly-Clark (Huggies) have announced that their prices for this baby care essential will increase in 2021. The increase is expected to be less than 10% for each brand, but it can add up for households with young children. Raw material prices are to blame for making diapers more expensive to produce, and shipping safeguards, including the container shortage, have made freight more expensive, according to Insider.
Chicken farmers have struggled to keep pace with the pandemic, when demand increased because more people were cooking and eating take-home. In addition to this demand, treatment facilities have struggled to stay open safely, and many have faced temporary closures. Chicken wings increased by around 80 cents per pound between February 2020 and 2021, according to Restaurant Business Online.
Many vendors can put a high price on chicken products as supply and demand stabilize, which could mean you are paying more for your hot wing cravings whether you dine at home or at a restaurant. .
6. Construction timber
Wood prices have increased in recent years. But the pandemic has prompted many to take on new home improvement projects, and the home sales market has also exploded in the past year. There is no shortage of lumber itself, but a dearth of treated lumber ready to be assembled into new homes or renovated decks. There is also a shortage of woodworkers in some places, which is slowing down the transformation of these trees into 2x4s. If you want wood now or soon, it will cost you a premium.
7. Toilet paper
Prices for pulp – the shredded wood used to make paper products like toilet paper – have increased dramatically since the fall. This is a problem similar to that of lumber supplies, where the raw material is not scarce, but the processed version is.
You are unlikely to see toilet paper becoming as scarce as it was last spring when the pandemic forced us to stay home for weeks. But you can see the prices go up for this household necessity, if you haven’t already. Toilet paper prices have already risen by more than 15% since last May, according to NielsenIQ data cited by CNN.
How to think about your expenses during shortages
There isn’t much you can do to try to control the prices of the products you want to buy, and in many cases it will be difficult to find a good deal when entire industries are under pressure.
“It’s not a shortage that’s going to last 10 to 15 years,” says Vyas, predicting instead that we will see the shortages disappear in about two years. “The problem is, do you need it today, if everyone wants it today,” he said of a hypothetical article: “You’re going to pay a premium.”
How much premium you are willing to pay is up to you as the consumer. If your baby needs diapers, you are probably still going to buy them, no matter how much the prices have gone up. But if you’re thinking about a long-term purchase like a home improvement, it may make more sense for you to delay the project until supplies stabilize.
And the higher your income, the less worried you are about paying a premium, says Mani. “It’s the people with the highest disposable income who also have the highest purchasing power,” she says. “For this segment, the price is relatively less restrictive, [while] more access and convenience. “
But even if you have money to spend, beware of the urge to buy something, no matter what the price. The price scam, which turned online shopping into a minefield of price comparison at the start of the pandemic, is sure to happen this summer too, especially on online platforms that allow third-party sellers to secure their prices. own prices.