Supply Chain Delays – Supply or Demand

As has been noted, the surge in goods demand is part of the story for why shortages and price pressures have mounted. Here’s another illustration.

Figure 1: Inbound TEU’s, Port of Long Beach (dark blue), 12 month centered moving average (sky blue), and 2009M07-20M01 trend (red). NBER defined recession dates peak-trough shaded gray. TEU = twenty foot equivalent unit. Source: Port of Long Beach,  NBER, and author’s calculations.

Inbound traffic is above trend, at least as measured by 12 month centered moving average. This is consistent with the view that elevated goods demand is driving some of the logistical issues currently being experienced.

One interesting aspect of the series is that it started declining substantially even before the pandemic struck. That in turn is consistent with tariffs biting on imports, or decelerating growth. On the other hand, outbound traffic has been off-trend for years.

Figure 2: Outbound TEU’s, Port of Long Beach (dark blue), 12 month centered moving average (sky blue), and 2009M07-16M12 trend (red). NBER defined recession dates peak-trough shaded gray. TEU = twenty foot equivalent unit. Source: Port of Long Beach,  NBER, and author’s calculations.

43 thoughts on “Supply Chain Delays – Supply or Demand

  1. w d w

    hm, if you look at 2018, you will note, that todays TEU numbers arent that much higher than todays numbers are they, but the supply crisis is real. and more than likely caused by the crash the reaction to the pandemic last year. never mind that the supply is lower too, since many companies adjusted what they sold and where in response to crash in demand. now that demand is back, which suppliers are struggling to adjust for the increased demand (last year they changed from what product to another…now the demand for both is causing them a major headache)

    1. Menzie Chinn Post author

      w d w: On the import side, TEU’s (latest available centered moving avg) is about 15% above mid-2018 (note the data are plotted on a log scale).

      1. Moses Herzog

        Is this an indication that “on a short term basis” log could be a little misleading??—or just that goofy guys like me should pay attention to more than one way of graphing or contextualizing data??

          1. Moses Herzog

            @ rsm
            I’m genuinely sorry about your brother, but I’m not sure you’re coming across as coherent at this point. The chart is simply saying ocean side docks/ports are having a hard time keeping up with demand that went from park into 7th gear very quickly. Unless you’re implying collusion. I’m even willing to listen to arguments that collusion is there,but you have to give us more than angry sentences. We neeed links or journalism.

            If your brother was a good man I have zero reason to doubt it) he’s most likely in a happier place now. Try your best to focus on that thought. If you don’t believe in Heaven, then you can argue his pain as “ended”. I hope you can find some comfort. There are worse places you can go for comfort than your local neighborhood Church. Hopefully not one of these modern “dot com” date night Churches. But one connected to some denomination. I’ll pray for you, and i mean that, in a non-condescending way. I know Menzie and other commenters here care for your well being, but they don’r know how to respond to angry declarations maybe.

          2. Moses Herzog

            @ rsm: If Menzie doesn’t mind and you think it would help, I can put addresses up for places that will send you Bible reading materials by old fashioned post mail (“snail mail”) . These are FREE resources. I don’t know if you can still get free Bibles. I know I got one once handed to me free by Gideons once, but I don’t know if you can send away for Gideons for free or not. But I know it’s a warm feeling to your soul when a stranger hands you one on a cold autumn day running late to a college class. Let me know and I’ll put the links or mail addresses in this same thread.

          3. Barkley Rosser


            As I think you are well aware, much of the time Moses Herzog and I give each other hard times about this and that. But on this matter, despite my having probably been harsher on you than anybody else here, or near the top anyway, I am sorry that your brother died and that you are having such a hard time dealing with it. I am not as religious as Moses seems to be, but if his offer of help might actually be of help to you, I applaud his effort and hope he can help you.

            So I guess maybe we were told more of the details of all this at some point, although I do not remember it. What I have seen is that I guess he was in finance, and so apparently you view his death as arising from problems related to him receiving poor information about risks, or something like that. So, you are blaming “all” economists for this, which is why you call us murderers and talk about “crimed-up charts,” as well as your talk about standard errors and noise, and so on. I frankly think this is a stretch, but I do not know the details of what happened with him. Was he specifically given some outright incorrect information by an economist or a group of economists?

            I know you will probably view this as just special pleading, but even if it is somehow at least partly true that economists generating or not reporting sufficiently risk information or data, I would note that there are lots of economists who have nothing to do with such activities. One is pure mathematical theorists who simply never deal with data. Many criticize them for making unrealistic assumptions in their models, which make their models essentially useless and irrelevant, which may be true. But offhand I think it is quite a stretch to somehow blame them for whatever inaccurate or misleading risk data that may have caused your late brother problems.

            Another group are people dealing with economic philosophy or history of economic thought. Now these people tend not to be doing mathematical stuff, but they are also generally not dealing with any kind of empirical data at all. They may be even further from having anything to do with the sorts of things you see as having brought your brother down. Are they also murderers?

            Finally, perhaps closer to being possibly guilty parties are economists who focus on policy but do not generate data. They may use it, but they are often not even aware of these problems regarding non-certainties associated with estimating data. They are trying to figure out policies and are often more caught up in things like laws and institutions and organizations and political forces rather even than data, much less theory.

            Oh, and on the matter of angels dancing on the head of a pin, curiously enough there is a very small set of economists who actually do worry about matters that essentially boil down to something like that. But they are a small set of pure mathematical theorists, those people who never deal with data at all. And they are a very esoteric subset of those, really out in space. This is people who worry about using a different kind of mathematics for doing things like general equilibrium theory, notably something called non-standard analysis, which allows for real numbers that are infinite and their reciprocals which are infiinitesimal. Arguably this makes doing calculus and some other things easier. But it suggests that if one thinks of zero as a pin, then if one sticks with standard math there is only one angel dancing on its head. But if one uses non-standard analysis, then one may have an infinite number of angels dancing on the head of the pin, all those infinitesimals that are zero distance from zero but are not quite exactly the same thing as zero.

            This type of mathematics is actually closer to what both Newton and Leibniz, especially the latter, appear to have been thinking in terms of when they separately invented calculus. But 19th century mathematicians pooh-poohed this sort of thing and did calculus without all this weirdness, although it implies that dy/dx is an actual numerical ratio that is not just the limit of a sequence. Its modern version was invented or rediscovered if you prefer by the late Abraham Robinson, who wrote a book about it in 1966 and then coauthored some papers with some theoretical economists about it. I met him on several occasions, a pretty formidable individual he was.

            Anyway, the economists who really are doing something like counting the angels dancing on the heads of pins are among the farthest out of those purely mathematical theorists who would never go near any real data to save their lives, and so probably not responsible for whatever it was that brought your late brother to his unfortunate end.

          4. Moses Herzog

            @ rsm: Here are the materials if you want them. It’s not like they’re going to check your real name. You can even make up an imaginary name tied to the mailing address you want it sent to. You can “lie” on your name to keep your privacy. i believe you have that right:

            My experience is they send the first one pretty quickly. Here is another one you can try:

            Yes, the CD is a little goofy kind of salesmanship. Maybe some other commenters here will poke fun of me referencing you to this. YOu can make your own judgements on it. If you think it’s total cr*p, that’s fine, I don’t/won’t take itb personally. You can junk the CD if you like, but the newsletters and TV show can give you some comfort in difficult and trying times.

            Or you can be like me and get sloshed on drinks alone listening to music every few days. You know, the method isn’t so important, just having that bridge to get you through a rough patch. I hope you can feel better,

      1. pgl

        What’s Trumps trade war supposed to be reduce this trade deficit? Another miserable failure ala a truly miserable President.

  2. paddy kivlin

    sometime in late 1990’s naval shipyard long beach was shuttered, peace dividend or such. brac

    the navy had a “mole” which went over to the port of long beach to expand container facilities.

    part of growth was “build it, we will come”, the real estate is now filled.

  3. Moses Herzog

    Did anyone notice that ZH blog is having a children’s tantrum over Biden asking the FTC to look into illegal pricing scams by the oil industry??

    Does anyone remember the Enron scam out in California?? If the oil industry or Wall Street isn’t doing anything to artificially raise oil prices, what is ZH afraid of?? That we will find out something similar to traders arranging the electricity black outs in California~~only this time the scam is to con Americans there is a “shortage” of oil supply?? What is ZH and friends afraid of??~~ if it’s simply a supply/demand issue?? Funny how immediately after investigations into illegal pricing schemes get suggested by President Biden we see the trading prices of oil suddenly and “miraculously” drop.

    Because “nothing is going on” right?? Just like Facebook/Zuckerberg wasn’t cavorting with Putin to elect the orange monstrosity in 2015-2016. “Move along, nothing to see here…… “

    1. rjs

      even with recent 7 year highs for oil & 12 year highs for natural gas, i’m seeing a lot of domestic E&P companies report 3 quarter losses; hedging against lower prices, they were bitten by higher ones….even Cheniere, selling $5 US gas for $30 in Asia and Europe, took big losses….that industry doesn’t look like companies scamming higher prices to me, although i wouldn’t put it past the money changers in the NYMEX temple..

      1. pgl

        Cheniere may have reported losses for the 1st three quarters of this year but they normally enjoy high profits. I read their 10-Q and this loss is a temporary matter for the speculative trader and is not likely representative of the entire energy sector. So not exactly a rebuttal of what Biden is claiming. But nice try.

        1. rjs

          as exclusively an exporter, Cheniere benefits from lower domestic prices, so i certainly did not consider my mention of their losses as a “rebuttal” of Biden’s allegations…

          my point was that a large number of US oil & gas E&P have been betting on lower oil & gas prices with their hedging strategies and hence were also losing due to higher prices, even moreso than consumers….if they’re betting on lower prices, they don’t attempt to manipulate them higher so as to lose their bets..

          1. rjs

            just to support my point that these companies wouldn’t be the ones manipulating prices higher:

            U.S. Natural Gas Producers Face Billions In Hedging Losses In 2022 – US gas producers are set to book billions of dollars in hedging losses next year because they hedged most of their 2022 production before the recent energy crunch caused gas prices to soar, a Rystad Energy analysis reveals. The analysis zooms in on a peer group of shale-gas-focused producers that accounts for 35% of unconventional gas production and about 53% of shale gas production in the US Land region this year. These 11 operators stand to lose more than $5 billion in 2022 if the average Henry Hub price strip remains at $4 per MMBtu – an amount that could double if Henry Hub prices average $5 per MMBtu.

  4. pgl

    The GOP speeches on the Gosar resolution are beyond disgusting. Let’s see.

    Kevin McCarthy says what Gosar did was OK as Biden is a socialist creating labor shortages and other weird junk like that.

    And Gosar just compared himself to Alexander Hamilton. OK! I guess Gosar’s 6 brothers and sisters who want him out of office do not appreciate their brother’s patriotism. Or something like that.

  5. macroduck

    What we are seeing in much of the real data is evidence of policy success. Covid generated negative supply and demand shocks. Fiscal and monetary policy responses aimed at reducing the welfare loss and so reduced the supply shock. Vaccination and social distancing addressed the supply shock, and while successful has not yet been as successful as the demand-shock response. One side effect is a shift in demand toward goods relative to services.

    So we have two somewhat overlapping sets of policies aimed at relieving negative shocks. Both are successful, but work at different speeds, leading to imbalances. Those imbalances show up as welfare loss.

    So the first question, setting politics aside, is whether the welfare gain from policy efforts is greater than the welfare loss. Assuming nobody wants to argue that we’d be better off with no policy response (any libertarians out there?), then we move on to the second round of questions. In the absence of hindsight, could policy have been better calibrated? (For historians, including those attempting to improve future policy.) Can policy now be adjusted to improve near-term welfare outcomes?

    For my money, the policy response could have been better, but was quite good. A very short recession, a very rapid recovery of employment and output in most sectors. Sure, there are always winners and losers, and some people are never satisfied. The outs always claim the ins have failed but that’s just small-minded politics. A comparison between real-side data this time with any other recession in our lifetimes shows this recovery to be quite good. Much of that is down to policy.

  6. ltr

    October 25, 2021

    What Everyone Gets Wrong About the Never-Ending COVID-19 Supply Chain Crisis
    Spoiler alert: Just-in-time inventory management was never the problem.
    By Yossi Sheffi

    The ongoing global supply chain crisis caused by the COVID-19 pandemic shows no sign of abating. Widespread product shortages are focusing attention on supply chain issues as never before — and while this publicity has shed some light on the problem, it has also spawned (misguided) calls to end the practice of just-in-time inventory management.

    Multiple factors have led to the current situation, but they spring from two overarching causes: suppliers’ inability to adjust to soaring demand, and government interventions. In order to develop solutions to pandemic-induced product shortages, we need a better understanding of how these issues have played out since early 2020 and resulted in a worldwide logistics logjam.

    The Pandemic Effect

    As the pandemic took hold in March 2020, consumer demand patterns shifted abruptly. A shift to working from home, along with school closures, fueled increased demand for larger houses, home gadgets, computer and communications gear, furniture, toys, and recreational equipment. Such a dramatic shift would have strained manufacturing in the best of times. During the pandemic, manufacturers could not adjust in time to bridge gaps between supply and demand as they dealt with ongoing labor and material shortages, intermittent plant closures, and shipping delays.

    Typically, short-lived supply crunches dissipate quickly as rising prices suppress demand and increased supply restores market equilibrium. But contrary to what standard economic theory about reaching supply-demand equilibrium suggests, prices have risen throughout the economy — in many cases substantially — while shortages have persisted….

    Yossi Sheffi is the Elisha Gray II Professor of Engineering Systems at MIT and director of the MIT Center for Transportation and Logistics.

  7. Moses Herzog

    Off-topic, worthy of a read

    I wonder when it’s going to dawn on NYT that writers and journalists don’t appreciate working their butts off for getting handed nickels for doing “freelance” journalism. I bet the more guys that jump ship it’s eventually going to hit them.

    If I was Glenn Thrush I would have jumped ship awhile back. Let these people who can’t find their way home from a beer bar get their own taxi and their own by-line. It’s not worth it to get fired for babysitting people who should have known how to sniff out a story before they were hired at NYT.

  8. pgl

    Kevin Drum is arguing there is no shortage of truck drivers with two key charts. I’m calling foul on what may be incomplete analysis:

    First chart shows # of truckers now = 1.05 million which is where this was in 2019. But with more goods being shipped – shouldn’t the market increase the supply of truckers with higher real compensation.

    Second chart shows real compensation now slightly higher than it was 2018. Of course real compensation had fallen from 1980 to 2018 as ltr has shown with more useful FRED charts. Why did Kevin start the chart just 3 years ago? Maybe he has hired CoRev as his research assistant.

    1. baffling

      what you need to know is the slack. not all cdl people are actually driving truck, but they are available to drive. if there are a lot of idle cdl drivers, that means you do not really have a shortage of drivers, you have a shortage of good pay and working conditions.

      1. Moses Herzog

        There’s actually more parallels between semi-drivers and public school teachers than one would imagine. . Often times drivers aren’t asking for that much. Just respect and non-abuse. They love many aspects of the job, and the colleagueship. If they are promised pay (layover pay, toll reimbursement, reimbursement for tickets for breaking the law the shipper and trucking company promised they would pay because the laws had to be broken to make the deilvery) If semi-drivers drive a forklift they should get the same wage they get for over-the-road driving, not a standard rate for clearing out a 53′ trailer that when you divide it by the time doesn’t match minimum wage. So you see this kind of attrition rate, very similar to public school teachers in states where the pay is below industry standard (for teachers). where there comes a point, even if you love many aspects of the job, the disrespect and nonrecognition just eventually rots your internal organs out, and you leave. It’s been that way since the early ’80s when Reagan and the Republicans broke the labor unions.

        I would never try to dissuade someone from driving a semi-truck if they have that dream or aspiration. I’d just tell them you better have a strong stomach for swallowing shit.

        1. Moses Herzog

          I should have typed If semi-drivers are promised pay……. they should get it. Uncle Moses’ evil-hearted nemesis~~the “run-on sentence” strikes again.

  9. pgl

    The Rittenhouse defense team is calling for a mistrial because this jury gets to see a high resolution drone video of the shootings. Are you effing kidding me? These guys do not want this jury to know the truth. I guess it is too important to let this Trumpian twit go free and be cheered on by his racist fans.

      1. pgl

        Thanks for the link but …

        Rittenhouse’s lawyers had said in court they had planned to ask for a mistrial before they filed papers on Monday accusing the district attorney of “prosecutorial overreaching” and acting “in bad faith.”

        Defense attorneys always make this claim especially when they do not get their way 100% of the time. The defense had one version of the video from the beginning and likely knew a higher quality version was available. So this latest excuse for letting a murderous Trumpian punk walk is weak.

        1. Moses Herzog

          Any idiot can see where this is going : MISTRIAL because jurors cannot come to a unanimous agreement.

    1. Moses Herzog

      Just for the record, I haven’t followed the case closely and am neutral on whether Jones is guilty or innocent. However, I am broadly against the death penalty, and have zero confidence in the state of Oklahoma administrating the execution in anything even approximating a humanitarian way. That is, until I see evidence otherwise, I’d prefer him just sit in jail.

      1. baffling

        isn’t oklahoma the state that basically tortures those it executes by death penalty? it is a pretty gruesome and horrifyingly painful process they use in oklahoma, from what i gather.

        1. Moses Herzog

          @ baffling
          It’s extremely bad, yes. There are multiple examples of what they call “botched” executions in the state of Oklahoma. But I don’t think torture is too strong of a word. It’s a pretty apt description. I can give you the epitomical example.

          The woman who wrote that story, Ziva Branstetter, is probably the best journalist the state of Oklahoma has ever produced (although she was raised in Arkansas). She now works as an editor at WaPo. If you take all the pretty words away on the Lockett execution, they did a complete clusterF___ on the injection of the drugs and gouged his groin multiple times with a syringe because the state “nurse” couldn’t find a vein.

          I have stated to anyone who would listen, that Oklahoma needs to go back to using gas. But they continue on doing it the same way they have for decades now, thinking that going about it the exact same way is going to change the result.

  10. ltr

    October 25, 2021

    What Everyone Gets Wrong About the Never-Ending COVID-19 Supply Chain Crisis
    Spoiler alert: Just-in-time inventory management was never the problem.
    By Yossi Sheffi

    Yossi Sheffi is the Elisha Gray II Professor of Engineering Systems at MIT and director of the MIT Center for Transportation and Logistics.

    [ MIT Transportation and Logistics has been doing important work on emerging supply-chain problems, but the work has seemingly been little attended to. The MIT division has an international presence and scope. ]

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