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Where Did the Supply Chain Break?

Global supply chain disruptions began in 2020, creating bottlenecks throughout the chain. There is no easy global solution, creating a lot of uncertainty around product shipping, stocking, and prices. Experts don’t see the bottlenecks resolving until, at the earliest, mid-2022.

Where Did the Supply Chain Break?

supply chain image

Global supply chain disruptions began in 2020, creating bottlenecks throughout the chain. There is no easy global solution, creating a lot of uncertainty around product shipping, stocking, and prices. Experts don’t see the bottlenecks resolving until, at the earliest, mid-2022.


When COVID-19 hit the United States hard enough to prompt employees and students to be sent home, Americans started shopping online (online spending increased 40%) to replace planned in-person purchases, to improve the homes they weren’t leaving, and to create impromptu home offices and classrooms. The desire to buy isn’t waning, but price increases due to inflation may put a damper on spending—good news for the supply chain, but not for businesses, consumers, or the economy.

Up 32%
Increase in American spending on consumer goods since April 2020

Percent of American consumers’ spending accounted for by goods (up from 36% prepandemic)

Up 6.2%
Year-over-year growth in October of the Consumer Price Index, which measures the prices urban consumers pay for specific goods and services over time. This was the largest annual gain since November 1990.


American manufacturing has been on the decline for decades (its share of the U.S. GDP dropped from 27% to 12% in the past 50 years), and China has stepped up to supply 42% of the goods shipped to the United States. As the newly discovered COVID-19 spread, China locked down more than than a dozen cities with millions of residents in Hubei for about 2 months starting January 23, 2020. Factories were closed, goods couldn’t be transported through the area, and airlines reduced passenger flights (which had also transported exports). Production rebounded soon after but has fluctuated due to COVID lockdowns and shortages in both labor and electricity.

China’s share of the goods imported to the United States, making it our top supplier

Year-over-year increase in U.S. imports from January to September

$98.2 Billion
United States’ record deficit in goods trade, hit in September


COVID-19 travel restrictions have essentially trapped merchant sailors aboard the ships they work on. As they haul these shipping containers around the globe, they aren’t being allowed off of their ships—unable to walk on land, get medical attention, refill prescriptions, or fly home—for as long as 18 months. More unfortunate are seafarers left to starve on failing ships abandoned by the vessel’s owners. Exhausted workers on operational cargo ships are unable to stop working because replacement crew members can’t be flown in.

Approximate number of large commercial cargo vessels worldwide, which are staffed by nearly a million seafarers

Commercial ships abandoned by their owners in 2020 (a record high), trapping more than 1,000 merchant sailors

Estimated number of seafarers who must continue to work on commercial cargo vessels despite their contracts having ended because COVID-19 restrictions don’t allow them to fly home or their replacements to come to the ship


Intermodal shipping containers safely store goods as they are transported via ship, train, and truck. The global supply of shipping containers is tied up in the wrong places, primarily in the United States, leading to shortages. Containers that would be shipped back to China empty are waiting to be taken off ships at congested U.S. ports. Once emptied, the containers stack up in warehouses, lots, and streets on the West Coast, because carriers don’t want the unprofitable job of taking them back to China.

China ramped up production while the United States was shut down due to COVID, and the bottleneck worsened over time due to the increase in imports, labor shortages, and the container shortage. This has caused sea freight costs rising more than 300% year over year as of August, leaving some companies unable to ship their goods, which created more shortages.

Cargo ships waiting to be unloaded at California’s Ports of Los Angeles and Long Beach in November, with an average wait of 17 days

Cost for a 20-foot shipping container in November, up from $1,500 in late 2019, due to the shortage

New shipping containers manufactured in China in September to try to combat the shortage


Imported goods enter coastal ports then travel inland, switching between trucks and trains at intermodal centers. (“Intermodal” refers to movement between modes of transportation.) Trains can haul long lines of stocked containers continuously for days. But even rail terminals are inundated with too many containers, especially in the Midwest. The increase in containers led to a shortage in chassis, the wheels that must be put under a container so that it can be hauled by truck. Without enough chassis, intermodal centers were forced to stack arriving containers into tall inaccessible piles. Many freight owners were billed storage fees for containers they weren’t able to get access to.

Up 7.5%
Year-over-year increase in freight shipped via railroad in the United States, as of November

Up 35%
Increase in 40-ft. shipping containers offloaded in the Midwest in May 2021 compared to a year earlier

June estimate of shipping containers stacked at the Global IV terminal outside of Chicago, a crisis that prompted Union Pacific Railroad to reopen a nearby intermodal center and close the Global IV one temporarily to get the goods moving again. Cargo owners had to pay storage fees for their containers despite the railroad not making it possible to pick them up.


Most of America’s freight travels via truck at some point, making a shortage of truck drivers a crisis. Trucks are hauling more (2.4% more from August to September of 2021), but it’s not enough. Offers of increased pay haven’t enticed younger workers to replace older retiring drivers. The lifestyle isn’t appealing to many, and requirements regarding age, drug use, and driving record have barred other prospects.

Share of freight hauled by trucks in the United States in 2019

Estimated shortage of truck drivers

22-month count of truck drivers removed from their jobs for failed drug tests, including those who had used marijuana in a state where it is legal


Most of America’s warehouses were well stocked going into the pandemic, but early increases in demand and supply-chain hiccups worried retailers. To avoid shortages, they overstocked against future supply chain disruptions. With existing warehouses full, they are building more, closer to consumers to speed up shipping. Warehouse rents have doubled in some areas.

Nearly a half million additional warehouse employees are needed, but the working conditions and pay aren’t enough to fill these job openings. Big retailers have begun offering to improve workers’ pay and benefits to staff their warehouses, but it may not be enough to get the goods moving efficiently.

> 1 billion sq. ft.
Warehouse storage space being used in the United States in 2021, up from 800 million in 2020

U.S. warehouse vacancy in November, a low that can cause warehouses not to be able to function or accept freight. Vacancy is at 1% around the Port of Los Angeles, the lowest rate ever recorded there.

Additional workers needed in U.S. warehouses as of July.


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