Onshoring In Action. Here’s The Future Of Global Supply Chains.

This time last year, the headlines were full of stories about broken supply chains, empty shelves, and long delays at logistical chokepoints. The Port of Los Angeles had over a hundred cargo vessels waiting offshore for their chance to unload, while shortages of truck drivers and chassis made the unloading nearly impossible. The ripple effects of the supply chain breakdown extended to empty warehouses and the unavailability of goods in stores or online.

Above all, there were higher prices for goods due to competition for scarce supplies. What a difference a year makes.

There are still spot shortages of goods today, but the overall situation is not as dire. Vessels are unloading, trucks are available, and warehouses are full. Does that mean there has been a happy ending to the supply chain crisis? Not at all.

The current situation reveals as much dysfunction as the situation last year. It’s just that the dysfunction is taking a different form.

Warehouses are full because consumers have stopped buying. Ships are being unloaded because demand for goods has dropped sharply, and new orders are drying up. Trucks, containers, and chassis are suddenly available because far few goods need to be transported.

In other words, world trade is slowing down, the U.S. economy is headed for a recession, and the double- and triple-orders that purchasing managers made last winter arrived in the spring and summer just in time for a buyer’s strike.

It turns out the cure for a supply chain crisis is a recession where no one’s buying much of anything. This is all described in great detail in my new book, Sold Out.

The book gives the history of Supply Chain 1.0 (1989-2019) and predicts the rise of Supply Chain 2.0 beginning in 2020 and evolving for years to come. Supply chains have existed since antiquity and will continue to exist indefinitely. Yet, the exact structure and trade channels change.

This article epitomizes the rise of Supply Chain 2.0. It describes how Taiwan Semiconductor Manufacturing Co. (TSMC) is building two new multi-billion-dollar semiconductor fabrication plants in Arizona.

TSMC is based in Taiwan, but it sees the danger of a Communist Chinese invasion. TSMC is also alert to new semiconductor sanctions imposed on the Communists by the U.S. It can solve both problems by building plants in America.

And these are not ordinary plants. They are state-of-the-art facilities that will be able to manufacture cutting-edge 3-nanometer chips. Look for more developments of this type that go by the name of “onshoring” or “friend shoring.”

Supply chains are getting shorter, but they’re also more resilient and secure. This will be one of the most important factors for investors to take into account in the years ahead.

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