A cargo ship moored near Everett last year was waiting for a berth in Vancouver, British Columbia. (Andy Bronson / Herald file)

A cargo ship moored near Everett last year was waiting for a berth in Vancouver, British Columbia. (Andy Bronson / Herald file)

Where’s your stuff? The supply chain snarl explained

Port of Everett CEO Lisa Lefeber recently offered a many-layered explanation of the shipping crisis.

EVERETT — You ordered a new couch three months ago — now where is it?

Is it still aboard a cargo ship waiting to secure a berth? Has it even been built?

Lisa Lefeber, CEO of the Port of Everett, might be able to explain why it hasn’t been delivered.

You can start with supply chain disruptions — the gridlock of goods, vessels, seaports and ground transportation brought on by the COVID-19 pandemic; temporary factory shutdowns in China, which manufactures one-third of the world’s consumer goods; and the sea-going cargo industry’s growing reliance on larger ships.

Normally, the supply chain is an efficient, well-oiled machine, said Lefeber, who offered a primer during a recent virtual discussion sponsored by Economic Alliance Snohomish County.

Lefeber was joined by Carl Wollebek, the Port of Everett’s chief operating officer.

You place an order for furniture, clothing or food and it arrives at your door in timely fashion and “everybody’s happy,” Lefeber said.

These days, the course isn’t so smooth.

COVID-19 snarled the global supply chain, but other factors are, and were, at play, Lefeber said.

For starters, it helps to know that 90% of the worlds’ goods — imports and exports — are transported by ship. The remainder travel by air, usually as belly cargo on passenger planes or in an air freighter, Lefeber said.

Even before the pandemic, the international shipping industry had begun to change course.

With the goal of putting “more containers on fewer ships,” major maritime companies began adding larger vessels to their fleets.

It was a dramatic shift that “happened almost overnight,” Lefeber said.

The problem was only a handful of ports could accommodate the super-sized ships, which require larger, sturdier container terminals to off-load, she said. (In recent years, many seaports, the Port of Everett included, have sought to upgrade their facilities to serve larger vessels.)

Then the pandemic struck, and the dearth of big-ship accommodations became an even more pressing problem.

As the number of coronavirus infections rose, workforce shortages ensued. With deckhands and dock workers sick or quarantined, there were fewer people to load and unload the ships.

But there was another disruptive force affecting the industry — a change in consumers’ buying habits, Lefeber said.

Businesses and consumers went on a buying spree, she said.

“It’s was easy for people to buy on their phones,” Lefeber said of the surge in consumer purchases that marked 2020 and 2021.

With the pandemic keeping people indoors or working from home, along with low interest rates, home improvement and redecorating projects took off.

Standard-term mortgages, refinances and cash-out loans, which can be used for home improvement, were at all-time lows.

As a result, demand for lumber, furniture, appliances and building and construction supplies skyrocketed.

Businesses also changed their buying habits. The supply chain’s standard just-in-time model, which allows companies to keep inventory on hand to a minimum, also contributed to shortages as supplies were slow to arrive.

When retailers and grocery stores saw shoppers empty the shelves of toilet paper and cleaning supplies, for example, “everyone started getting nervous,” said Wollebek, the port’s chief operating officer.

Instead of slowing down purchases, which could have helped relieve pressure on the supply chain, businesses revved up buying, Wollebek said.

Companies adopted a “just-in-case” model that emphasized having plenty of stock on hand. “Nobody wanted to get caught empty-handed,” Wollebek said.

So with a limited number of seaports able to handle the largest cargo ships, a depleted workforce, full warehouses and a shortage of shipping containers, there was a perfect storm, said Lefeber — an upended supply chain.

“The end result is you started seeing ships stacking up around harbors throughout the United States, particularly on the West Coast,” Lefeber said.

Now there are new worries over production slowdowns at factories in China, Wollebek said.

In some cities and regions, manufacturers which normally operate seven days a week are open three or four days a week, Lefeber said.

It’s another reason people might still be waiting on furniture or appliances, or industrial equipment needed to support housing or restaurant construction, Lefeber said.

China’s zero-tolerance policy to contain COVID-19 has immobilized entire cities for days and weeks.

When authorities in Tianjin, which has a population of 14 million, recently discovered that a few residents were infected with the omicron coronavirus variant, they placed the city on a partial lockdown.

That response has only tightened as the Winter Olympic Games approach.

“It’s not uncommon for them — if they get a few cases of COVID to shut down an entire port for a few days,” Wollebek said of China.

When will the supply chain snarl untangle and unwind?

“Nobody knows how long this is going to last,” Lefeber said. “Don’t buy furniture right now if you can avoid it.”

Janice Podsada; jpodsada@heraldnet.com; 425-339-3097; Twitter: @JanicePods.

Talk to us

More in Herald Business Journal

Striking Starbucks employees talk to a woman who wanted to use the drive-thru but was turned away due to the strike on Wednesday, June 15, 2022, on Broadway in Everett, Washington. Workers at the 37th and Broadway store spent their morning picketing because a fellow employee had been fired the previous day in what the workers believe is an act of union busting. (Ryan Berry / The Herald)
Everett Starbucks workers go on strike after employee fired

The employee and her fellow union members claim she was fired for supporting the union. Starbucks denies it.

Property values soar 32% in Snohomish County due to hot housing market

Assessed values are up all across the county since last year. The impact on tax bills won’t be known for a few months.

Port of Everett hosting annual open house after pandemic hiatus

Also, Rustic Cork Wine Bar plans to open a second shop at Fisherman’s Harbor — the latest addition to the port’s “wine walk.”

Holly Burkett-Pohland, the owner of Burkett’s Home & Gift, outside of her new store front on Friday, June 17, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
New Everett gift store debuts in former J. Matheson space

For years, Holly Burkett-Pohland wanted to expand a business founded by her mother in 1978.

A Kenmore Air Cessna 208 Caravan. (Kenmore Air) 20220613
Kenmore Air to start daily flights from Paine Field to San Juans

Service begins July 14. Flights to Friday Harbor and Orcas Island airports take about 25 minutes.

Seattle Space Needle sues coffee chain over use of logo

The logo for Local Coffee Spot features a mug of hot coffee whose rising steam bears striking resemblance to the iconic tower.

Logo for news use, for stories regarding Washington state government — Olympia, the Legislature and state agencies. No caption necessary. 20220331
Foes of state’s capital gains tax drop plans for initiative

I-1929 sponsors say they are confident a lawsuit challenging the legality of the tax will be successful.

Smoother sailing: Arlington airport gets grant to fix runway

A $2.3 million federal grant will pave the way for a project to resurface the airfield’s main runway.

Workers build the first all electric plane, the Eviation Alice, on Wednesday, Sept. 8, 2021 in Arlington, Washington.  The plane is designed for regional travel and to carry nine passengers. (Andy Bronson / The Herald)
Eviation moves tests of electric passenger plane to Moses Lake

The Arlington company said a bigger runway and flatter terrain are better suited to early testing of the commuter aircraft.

An artist's rendering of the new Funko warehouse in Buckeye, Arizona. (Funko) 20220407
Funko warehouse layoffs begin this week in Everett, Puyallup

The layoffs, announced in April, are part of a plan to move distribution operations to Arizona.

Rendering of the front entrance of Spruce Elementary School in Lynnwood. (Edmonds School District)
Police: Edmonds schools sent $2.7 million check to fraudster

Police say the fraudster posed as a contractor for a new elementary school. A bank caught it at the last second.

Looking north, an aerial view of Paine Field in Everett. (Paine Field / Snohomish County) 20220605
Paine Field development plan envisions an expanded terminal

Once Sea-Tac Airport reaches capacity, the Everett airport is on the short list to absorb unmet demand by passengers.