Where do the goods customers order come from? In the past, U.S. stores have largely been stocked by supply chains that flow through the West Coast. However, the early days of the COVID-19 pandemic highlighted some of the weaknesses of the existing system.

Delays at ports have been some of the most significant and most persistent supply chain stories throughout the pandemic. While administrative efforts have helped clear the backlogs, shippers and the organizations that rely on them will remember what it felt like to have goods languishing at the Ports of Los Angeles and Long Beach.

Shipping organizations are realizing that port infrastructure represents a potential bottleneck in their operations — the question is what they will do about it.

Companies look east

The Wall Street Journal recently reported on some of the methods companies are using to diversify their supply chains and make themselves less vulnerable to congestion at ports. Namely, they are looking to East Coast ports such as The Port of New York And New Jersey.

The WSJ explained that companies such as Abercrombie & Fitch have begun to move a larger percentage of their goods through the East Coast. While the breakdown was previously 90% west and 10% east, the East Coast now accounts for 25% of the brand's imports.

The factors behind such decisions go beyond the desire to avoid further slowdowns in Southern California. The Panama Canal has widened in recent years, helping shipping to the East Coast, while companies have begun to import more goods from Europe, as opposed to relying so heavily on China.

Another company that has shifted east is Newell, the brand behind diverse products such as Sharpie markers and the items from Yankee Candle. The company, seeking to reach the eastern U.S., has opened a Pennsylvania distribution center and intended to add another in North Carolina.

Cranes unload cargo from a ship.Companies are rethinking their import shipping strategies.

Backlogs: Not just for the West Coast

Of course, moving operations away from the ports that suffered backlogs in 2022 is not a cure-all for shippers. As of mid-December 2022, the Port of Savannah in Georgia was struggling to clear a queue of its own, according to Maritime Executive.

With Savannah seeing the same increased activity as other major ports in 2022, it's perhaps inevitable that a backlog would take shape at the southern port. Diversifying points of entry for imports is an important way to add strength and resilience to supply chains, but organizations and port authorities will have to work together to make the new operations work.

Maritime Executive reported that administrators are hoping to solve the problem with a twofold approach. In the short term, the port will get ships moving as container volume normalizes, while in the long term, Savannah will add two large berths and additional container yards in areas now used for breakbulk.

Increased volume is a factor that affected ports around the U.S. in 2022, for better and for worse. Looking to 2023, shippers are naturally considering new ways to mitigate the disruption they felt throughout the year.

Maine's official nickname may be the Pine Tree State, but given its proximity to the coast and its abundance of sea life, it might as well be called the Lobster State. Employing an estimated 5,600 independent lobstermen, harvesting over 100 million pounds of the crustacean annually and contributing over $1 billion to the state's economy per year, according to industry data, the nation's lobster supply chain largely runs through Maine. 

Despite its prominence, one of America's largest grocery chains will stop buying lobster caught off Maine waters until further notice.

Whole Foods Market told Grocery Dive that it will "pause purchasing" Maine lobster upon receiving word that the Marine Stewardship Council has suspended the state's MSC certificate.

Named after the Marine Stewardship Council, MSC certification is a status symbol and a designation that tells buyers — such as grocers or fish markets — that fisheries support and implement sustainable fishing practices. To obtain this certification, fisheries must demonstrate how they're adhering to the sustainability protocols established by the United Nations Food and Agriculture Organization, such as by maintaining a clear chain of custody, guarding against overfishing and implementing other best practices.

But MRAG Americas, the body charged with monitoring fisheries' conformance with the MSC Fishery Standard, has stripped Maine of its certification due to a change in third-party verifications and ratings on the part of MSC as well as the Monterey Bay Aquarium Seafood Watch program.

In a statement obtained by Grocery Dive, a Whole Foods Market spokesperson said the suspension on buying from Maine is primarily due to the company's commitment to sustainability.

"[W]e only sell wild-caught seafood from fisheries that are certified by the Marine Stewardship Council (MSC) or rated either 'Green' or 'Yellow' by the MBA Seafood Watch program," the spokesperson emphasized. "These third-party verifications and ratings are critical to maintaining the integrity of our standards for all wild-caught seafood found in our seafood department."

The right whale is an endangered species, with only 350 believed to be remaining in the world.The right whale is an endangered species, with only 350 believed to be remaining.

Fishing practices called into question
The impetus for pulling Maine's certification, aside from the ratings change, appears to be related to certain fishing practices off the Gulf of Maine that may be compromising right whale migration patterns. An endangered species, the right whale is one of the rarest on Earth, with an estimated 350 left in existence, according to the National Oceanic and Atmospheric Administration. This past September, MRAG Americas determined from an investigation that Maine was no longer in compliance with the MSC Fishery Standard, which is designed to protect the species and other endangered ocean life. 

This marks the second time in two years that Maine has lost its certification and over a similar issue.

Maine officials, including Governor Janet Mills, recently expressed their objection to the suspension, noting that not a single right whale has died in the past 150 years due to Maine lobster gear or vessels.

"Despite this, the Marine Stewardship Council, with retailers following suit, wrongly and blindly decided to follow the recommendations of misguided environmental groups rather than science," Mills said in a statement, along with Maine Senators Susan Collins and Angus King.

Lawmakers went on to urge both Whole Foods Market and the MSC to reconsider their actions.

From personal protective equipment like N-95 face masks to vitally important medical devices like ventilators, product shortages were a common occurrence throughout the pandemic. While supply chain issues for some essentials have since been resolved, other shortages remain problematic for hospitals and physicians, as well as patients throughout the country. The devices that remain rare to this day include external defibrillators, chest drains, suction canisters and a number of dialysis products.

It appears that yet another medical device is quite scarce and it may be due to a deficiency of certain raw materials that are used in the manufacturing process.

The Food and Drug Administration maintains a regularly updated list of medical devices that are in limited quantity. Its latest entry concerns intra-aortic balloon pump devices, otherwise known as IABP. Made by the manufacturer Getinge, a long-standing medical technology company headquartered in Sweden, IABP devices are primarily used by cardiologists to help patients deal with health effects impacting the normal function of their hearts by providing temporary support to the ventricles. The ventricles serve as a muscular chamber and help pump blood from the heart out into the rest of the body's cells.

As with most medical devices, the IABP requires a variety of supplementary materials to be assembled and made ready for use. That's why in November, Getinge informed healthcare providers of how broader supply chain challenges were compromising its ability to produce items and meet orders.

"You should know that ongoing supply chain issues have significantly impacted our ability to build intra-aortic balloon pumps (IABPs), intra-aortic balloon catheters (IABs) and spare parts due to raw material shortages," wrote Jennifer Paradise, a Getinge product representative, in a letter obtained by Medtech Dive.

Supply chain issues are affecting the availability of heart-related medical devices.Supply chain issues are affecting the availability of heart-related medical devices.

Combination of factors plaguing production
While the letter doesn't state which specific raw material is compromising the manufacturer's ability to produce at a higher volume, it does cite other factors contributing to the issue. These include higher-than-normal demand for the device and the limited availability of a "component, part or accessory of the device." 

The missive also did not predict when Getinge would be able to ramp up production but did point out that it continues to fabricate the IABPs, just not at the pace it would like to in order to meet the growth in demand. The FDA, meanwhile, says that the shortage will persist into next year.

As for potential workarounds, Paradise noted that it would provide guidance for proper maintenance to ensure that IABPs will operate properly and avoid the potential of malfunction. The FDA made mention of what it's doing to improve the situation on its website, adding that it will continue to monitor the latest development and will report any updates on an as-needed basis.

This isn't the first time Getinge's proprietary device has made headlines. Last year, the FDA issued a recall for intra-aortic balloon pumps after being advised by the Swedish manufacturer that the battery could fail, compromising the safety and welfare of patients. At the time, the recall affected over 4,300 devices in the U.S. that were manufactured sometime between early March and late October 2021.

It's difficult to pinpoint the most important department when it comes to everything that goes on in the warehouse but a case can be made for fulfillment. During the pandemic, when lockdown measures created staffing shortages just as demand for consumer goods skyrocketed, fulfillment was overwhelmed with orders, creating shipping delays that persisted for months.

Automated fulfillment is helping to improve operations and right size inventories. Here is a brief breakdown of what automated fulfillment is, what businesses are using it for and the benefits of the strategy that have taken the related technology to new heights of utilization and popularity.

What is automated fulfillment?
As its title suggests, automated fulfillment refers to the implementation of technologies that automate fulfillment. When a warehouse receives an order from a customer, a multitude of actions take place for the desired item to be selected, handled, packaged, placed and shipped to the buyer. Instead of each of these processes being done manually, automated fulfillment leverages technology to perform them all faster, more accurately and with greater efficiency. Some of these technologies may include — but aren't limited to — robotics, conveyor belts, rollers, optimized sortation systems, pickers, mechanized arms and much more.

What companies are using automated fulfillment?
From Amazon to Walmart, e-commerce and big box retailers are among the most well-known users of automated fulfillment, each of them using the technology to varying degrees. Some organizations have dipped their toes in the automated fulfillment waters, testing some of the systems out first before investing in expansion.

A company that is in the midst of expanding its automated fulfillment network is Chewy, an e-commerce retailer specializing in pet supplies. After opening its first automated fulfillment center in Pennsylvania in late 2020 — the same year as the COVID-19 outbreak — Chewy's chief executive officer announced the company will grow it further, as reported by Supply Chain Dive.

Automated fulfillment resources help to hasten delivery while lowering costs.Automated fulfillment resources help to hasten delivery while lowering costs.

Speaking during a December earnings conference with investors, Chewy CEO Sumit Singh said the technology has proven particularly effective from a cost standpoint, noting outlay has diminished rather appreciably. In addition to its Archibald, Pennsylvania facility helping to reduce its expenses, Singh noted costs are also lower at Chewy's Reno, Nevada facility, which opened earlier this year. Filled volumes from there were roughly 20% cheaper relative to the company's non-automated network, Singh further explained.

"We're still ramping volume into the third fulfillment center, so there is incremental volume leverage that we expect to gain, and we're still continuing to scale our costs," Singh said.

As to the more recent expansion, Singh noted plans are underway to build two more automated fulfillment centers, with the first one scheduled to open as early as next year.

Here a few additional advantages of using automated order fulfillment as a product-based business owner:

Improve customer satisfaction
Businesses are constantly trying to up the ante when it comes to getting goods to customers faster, as much of their satisfaction hinges on speed of delivery. Automated fulfillment helps to get items out the door more quickly by doing in seconds what manual processes take minutes to perform.

Seamlessly respond to market shifts in customer demand
Underestimating demand proved to be a major supply chain dilemma for businesses during the pandemic. But through demand forecasting, a complimentary tool of automated fulfillment systems, your business can get a better sense of what demand will be like at any given time, allowing you to diminish, increase or maintain your inventory needs accordingly.

These are just a few of the reasons why investing in automated fulfillment can be a wise supply chain management decision. 

Amid rising mortgage rates triggered by the Federal Reserve's attempts to cool white-hot inflation, both home sales and housing starts have dwindled across the country. Indeed, existing-home sales in the U.S. have slipped for nine consecutive months now, according to the National Association of Realtors, and single-family home construction dipped by more than 6% in October, the National Association of Home Builders reported. That puts single-family home project activity 7% behind last year's pace through 10 months.

While the higher price of borrowing money is largely to blame for the sales decline, the drop in starts has also been influenced by how much more it's costing contractors to build. And it appears high prices for materials like concrete, drywall and cement will continue for the foreseeable future. 

According to the analysis of Turner & Townsend, a global real estate and infrastructure consultancy, residential building materials as a whole are expected to cost 7% more in 2023 than they did this year, Supply Chain Dive reported. They're also poised to climb again in 2024, but to a smaller degree, up 2.7%.

Michael Hardman, vice president of the United Kingdom-based real estate research firm, said that it's the recurrent nature of escalating prices for construction materials that is a major challenge for the industry's supply chain.

"[B]y 2024, we will have seen three years of dramatic price escalation," Hardman told Supply Chain Dive. "If projects — and compounding effect — are true, we will see material prices approximately 25% to 28% higher than they would have been by equivalence in 2020."

Builders have felt the effects of inflation, which has impeded home construction.Builders have felt the effects of inflation, which has impeded home construction.

Home affordability at its worst since 2012
These market factors have also contributed to ever-escalating home prices, even though demand among buyers has trailed off considerably. In October, for example, the median price among existing homes was $379,100, according to the National Association of Realtors, despite sales falling 5.9% that month. The year-over-year increase marked the 128th consecutive month in which selling prices rose among all housing types, single-family, condo and otherwise. It comes as no surprise that housing affordability has reached a decade-long low point, based on analysis done by the National Association of Home Builders.

For the past several years, lumber has been the primary building material experiencing price growth, influenced largely by shortages as well as tariffs. But now that the cost of lumber has come down, prices for other key materials are on the rise. These include substances that are vital for foundations, like cement and concrete. According to Linesight, prices for these materials were up a combined 14% during the third quarter.

Robert Dietz, chief economist at NAHB, said that as a result 2022 is on track to be one of the quietest times in recent memory for homebuilding activity.

This will be the first year since 2011 to post a calendar-year decline for single-family starts, Dietz warned. "We are forecasting additional declines for single-family construction in 2023, which means economic slowing will expand from the residential construction market into the rest of the economy."

Limited inventory, fueled by the steep cost of building, is keeping home prices in elevated territory and budget-minded buyers on the sidelines.

The vegetable responsible for giving salads, sandwiches and other common dishes their signature crunch is experiencing a supply chain crunch — and restaurateurs are warning customers it could crimp some of their menu offerings.

Due to a variety of environmental factors — such as drought, stifling temperatures and crop disease — lettuce availability has slipped, as growers have been hammered by uncooperative weather for the past couple of years. Indeed, in 2021 lettuce production fell 11% compared to the previous year, according to the United States Department of Agriculture. It isn't just one kind of lettuce, either — from romaine to bib to iceberg and more, the leafy green shortage is widespread. As a result, it's pushed prices northward, up almost 18% in October compared to 12 months earlier, USDA reported separately. This compares to a dip of 8% over the same period for fresh vegetables as a whole.

Since lettuce is a staple ingredient in a host of restaurant offerings, quick-serve entities have warned some of their customers about the lack of lettuce. Some of the fast-food chain franchises that have issued statements about the shortage include Taco Bell, Subway and Chick-fil-A. On its website, the eatery famous for its chicken sandwiches informs visitors that their menu selections "may be unavailable or prepared differently" for the foreseeable future, Parade noted.

Restaurants that specialize in lettuce, or for whom changing the vegetable would compromise quality or customer satisfaction, are issuing surcharges on lettuce, but informing buyers of their temporary policy through signage, Restaurant Business Online reported.

Iceberg and romaine lettuce growers were ravaged by inhospitable conditions in 2022.Iceberg and romaine lettuce growers were ravaged by inhospitable conditions in 2022.

Shortage blamed on extreme heat and blight
Major lettuce suppliers, meanwhile, are well aware of the lettuce crisis. Speaking to the issue during a quarterly earnings conference, Dole Chief Operating Officer Johan Linden attributed the problem to an unusually bad stretch for harvesting. For example, iceberg lettuce production is down 40%, which Linden said has been mainly due to extreme heat in states like California and Arizona, Supply Chain Dive reported.

Another contributor to the shortage is disease. As noted in Salinas Valley Agriculture, a publication produced by the Grower-Shipper Association of Central California, a virus called Pythium wilt has plagued growers' fields since 2015, becoming particularly pervasive in 2020 and persisting since. The disease, which causes lettuce to wilt and rot prematurely and is caused by water mold, primarily affects green leaf lettuces, as opposed to red leaf.

Impatiens Necrotic Orthotospovirus, otherwise known as INSV, has also ravaged growers and cut into their profits.

While food prices in general have experienced some of the biggest increases in prices fueled by inflation, the cost of lettuce has grown exponentially over the past several years. A box of iceberg lettuce on the open market cost $14 in 2019, according to Restaurant Business Online. Today, it's $63 per box, a near 400% increase. 

Suppliers remain confident that the lettuce deficit shouldn't last much longer, with Dole anticipating improvement within the first month of the new year. Prices may come down by then as well, depending on the degree to which supply normalizes and demand softens.

With crippling inflation taking its toll on Americans' budgets, consumers have been tightening their belts to save where they can. But they haven't let that belt tightening sap their holiday shopping appetite — and on Thanksgiving weekend, no less.

Over the five-day Thanksgiving holiday — running Thanksgiving Day to the following Monday — nearly 197 million U.S. consumers spent at least a portion of it shopping, according to newly released statistics from the National Retail Federation. Not only was that figure higher than last year — when inflation wasn't as pronounced — it was an all-time record, amounting to an estimated 76% of consumers. That's up from 70% in 2021.

Cyber Monday sales were particularly brisk, with an estimated 77 million individuals hitting the e-stores, NRF data showed. Combined with those in brick-and-mortar stores, the shopper total was just shy of 100 million.

The flurry of shopping activity comes as a surprise to some economic observers, especially given the degree to which inflation has occupied the nation's attention. According to a Gallup poll, approximately 1 in 5 Americans believe inflation is the biggest problem facing the United States, more than crime, climate change, border security or other common challenges respondents cite as important.

Matthew Shay, president and CEO of the National Retail Federation, noted that holiday shopping regulars and revelers got more creative with their spending to maximize their dollar's value.

"As inflationary pressures persist, consumers have responded by stretching their dollars in any way possible," Shay explained. "Retailers have responded accordingly, offering shoppers a season of buying convenience, matching sales and promotions across online and in-store channels to accommodate their customers at each interaction."

More Americans shopped for the holiday online, saving themselves on gas.More Americans shopped for the holiday online, saving on gas.

Buyers taking advantage of convenience shopping
In some respects, the growth in spending and shopping activity makes sense — particularly as it pertains to the uptick in Cyber Monday buying. With gas prices still uncomfortably high across the country — averaging more than $4 in several states — shoppers are turning to their laptops, desktops and mobile devices to shop, avoiding the drive to stores. In terms of actual spending, sales topped $11 billion, based on initial performance results reviewed by Adobe Analytics. That's a near 6% surge from 2021. At one point, online users were spending roughly $13 million per minute, Adobe revealed.

Additionally, retailers incentivized shoppers to log on by offering doorbusting deals, done in part to dwindle excess inventory.

Vivek Pandya, lead analyst at Adobe Digital Insights, noted that this strategy paid off — quite literally.

"With oversupply and a softening consumer spending environment, retailers made the right call this season to drive demand through heavy discounting," Pandya told Retail Dive. "It spurred online spending to levels that were higher than expected, and reinforced e-commerce as a major channel to drive volume and capture consumer interest."

Black Friday was also a strong day for retailers, surpassing Cyber Monday in consumer traffic. Over 87 million took to the stores on the day after Thanksgiving, according to the NRF's data. Almost 73 million leveraged Black Friday deals via online means.

Prior to the pandemic, just-in-time inventory — the supply chain management strategy of keeping "just enough" inventory in stock to satisfy expected demand — was considered conventional wisdom. But in the aftermath of COVID-19 and the product shortages that were omnipresent, organizations are reconsidering that erstwhile best practice. Indeed, according to a recent survey conducted by SAP, close to 66% of organizations are adopting a just-in-case approach to inventory and supply chain management.

What is just-in-case inventory?

At its essence, just-in-case inventory is the inverse of just-in-time. Instead of maintaining the bare essentials in terms of product offerings to fulfill sales goals or to avoid shelves emptying prematurely, just-in-case prioritizes having a surplus of inventory — "just in case" demand for merchandise exceeds supply. In short, it's an "everything and the kitchen sink" approach to inventory management.

What are the business benefits of just-in-case inventory strategies?

1. Increase competitiveness
When items are out of stock and customers are unable to purchase what they're looking for, it represents a missed sales opportunity. That's because buyers know that if they can't find a given product, they won't stop searching; they'll try to buy elsewhere — and will likely be successful. That lost sale may not be one-off instance either, if the alternative suppliers' good are of higher quality or sell for a more reasonable price.

Just-in-case inventory helps to keep loyal customers loyal by ensuring they'll come to you first for items they need to have, and can potentially get buyers to switch if their go-to supplier is experiencing sourcing issues.

An excess inventory strategy may be the new best practice for supply chain efficiency.An excess inventory strategy may be the new best practice for supply chain efficiency.

2. Add demand forecasting flexibility
Just-in-time inventory advocates laud this strategy for its cost savings since it lessens the risk of having to absorb the expense of buying excess product. But this approach can make demand forecasting more challenging since there is so little room for error between what is enough and what is too much for merchandise. Just-in-case leaves more wiggle room for demand forecasting since the strategy presupposes that demand will fall short of supply. Just-in-case inventory also makes planning simpler for other affiliate suppliers who have their own production costs to arrange.

3. Leverage bulk discount offering 
There's a reason why "buy one get one" offers are as popular as they are: Bulk buying saves money for consumers — and for businesses. It does so by allowing companies to make more efficient use of their resources, saving time on production processes and cutting costs associated with packaging and receiving.

Adopting a just-in-time inventory strategy also adds flexibility to how you go about selling your products. If you wind up selling substantially less than what you have in inventory, you can review what it will cost you to reduce the price of certain products while still turning a profit or make a BOGO offer of your own to stimulate buyer interest.

4. Avoid supply chain snags
While supply chains are operating more nimbly, the bottlenecks haven't entirely cleared. Close to 50% of respondents in the SAP survey said they anticipate more raw material shortages in 2023. Continually shoring up inventory can help you avoid production hitches when supply chain snags occur.

With another Thanksgiving concluded, retailers are gearing up for the most important time of year: the holiday shopping season. While supply chain disruptions have frustrated both buyers and sellers since 2020, many of the previous bottlenecks have since been dislodged, setting the industry up for what could be a banner year from a sales perspective, despite high inflation.

Steve Pasierb, president of manufacturing for The Toy Association, told The Wall Street Journal that conditions have improved considerably, particularly in comparison to how things were going last year.

"The script has been flipped," Pasierb explained. "From a supply-chain standpoint, it's the opposite of last year."

Some of these improvements have occurred at major shipping ports. In 2021, the Ports of Los Angeles and Long Beach were overwhelmed with container volume, which prevented arriving ships from docking, unloading and unpacking their TEUs. San Pedro Bay isn't seeing the same kind of traffic now, thanks in part to the authority implementing incentives designed to encourage shippers to remove empty containers more swiftly. In January, for instance, there were 109 container ships waiting to offload their deliveries at Los Angeles, the Journal reported, citing Marine Exchange of Southern California data. In November, there were only six ships waiting.

Gene Seroka, director of the Port of Los Angeles, noted in a November news briefing that retailers have been very bullish on demand, evidenced by the amount of container volume this past summer. Import activity has since dissipated.

"With cargo owners bringing goods in early this year, our peak season was in June and July instead of September and October," Seroka said.

Walmart and Target, for example, are both awash in inventory, having overestimated the level of consumer demand they expected to persist throughout 2022. Walmart has since whittled down its excess inventory by approximately 33% in the third quarter compared to the previous three-month period, Supply Chain Dive reported.

Discount pricing, designed to incentivize customers to buy, has helped to take the sting out of inflation, which is also contributing to a more normalized supply chain.

A looming work stoppage for rail workers could cause supply chain problems.A looming work stoppage for rail workers could cause supply chain problems.

Some items may still be limited in quantity
However, retailers and producers warn that certain products — which have very specific shipping instructions or methods — may still be hard to find due to a variety of supply- and demand- side factors. While shipping ports are operating more efficiently, rail yards are overwhelmed with containers, creating several chokepoints for truckers. There is also a pending rail strike which has yet to be settled between the federal government and unions representing rail workers. Roughly 30% of domestic freight is transported by railroad.

But for all intents and purposes, supply chains are "essentially back to normal," according to Corey Tarlowe, an analyst at financial services firm Jeffries.

"Now that retailers have cleared through the vast majority of excess inventory, they have the opportunity to focus on categories that resonate with consumers," Tarlowe told the WSJ.

These include improving the shopper experience, the return process and online purchasing channels.

Supply chains have received massive amounts of attention ever since the pandemic took hold. But of all the product-specific supply chains in the limelight, semiconductors have been the main attraction. They're at center stage largely because semiconductors are indispensable to the manufacturing of numerous consumer technologies, from coffee makers to car stereos to smartphones. Because they've been so difficult to come by for years now, this has led to production disruptions for a litany of industries.

But there are encouraging signs that semiconductor availability is improving — and just in time for the holiday season, when tech items are on many wish lists.

The highly popular Sony PlayStation 5 is expected to be on more store shelves as retailers gear up for the all-important holiday shopping extravaganza. During an earnings call, Hiroki Totoki, executive deputy president at Sony Group Corporation, said that the company was able to produce 6.5 million PS5 units during the second quarter, vastly more than the company expected when it revised its output estimates for the year in May.

At the time, Totoki noted that it would reduce its output total for the gaming units to 18 million for 2022 as a whole because of the toll lockdown measures had on the economy in China, where Sony sources many of the materials it needs to manufacture its merchandise.

"If the question is whether we can meet the demand, I think we're still short somewhat," Totoki said during a May 10 earnings call, as reported by Supply Chain Dive.

However, thanks to better-than-expected supply levels of the parts required to assemble the gaming consoles, Totoki said Sony should be able to produce more than 18 million units after all.

"In the second quarter 6.5 million units, we are able to produce that amount, and sales of the PS5 have been according to the plan," Totoki said in a Nov. 1 earnings call, according to Supply Chain Dive. "And therefore, for the production, we are able to have a more speedy production."

Gaming consoles like PlayStation and Xbox are heavily reliant on semiconductors.Gaming consoles like PlayStation and Xbox are heavily reliant on semiconductors.

Demand for semiconductors has tapered
What's helped to shore up semiconductor inventory is a slowdown in semiconductor sales. In September, sales for semiconductors fell 3% compared to 12 months earlier and 0.5% from August, according to the Semiconductor Industry Association.

Sales have also dwindled globally, which may be a function of inflation. Totaling $141 billion during the third quarter, sales were down 3% from the same three-month period in 2021 and by 6.3% from the second quarter.

Sony PlayStation 5 has been the must-have item for children and adults alike since the console was originally introduced in November 2020, due largely to the remarkably realistic gameplay the system boasts and compatibility with ultra-high-definition TVs. But a pre-existing semiconductor shortage has hamstrung production ever since the units first went on sale.

Totoki said demand for the PS5 remains robust, taking less than 18 hours for the company to sell out the 100,000 units that were available for sale in September. He expects demand to continue heading into 2023 and is confident the company will be able to meet it.

Added supply of semiconductors may be why.

From a smoother semiconductor supply chain to more retailers having PlayStation 5s in stock — a gaming console that was nearly impossible to find last Christmas — market conditions would suggest brisk video game sales this holiday. But manufacturers and gaming developers suspect otherwise, a turn of events that would push the pause button on the industry's robust growth.

Major video game producers like Sony Group, Electronic Arts, Take-Two Interactive and Nvidia Corporation among others believe video game sales will be short of initial projections in the fourth quarter, according to earnings announcements obtained by The Wall Street Journal.

Hiroki Totoki, finance chief for Sony, noted in a recent earnings call that the pull back in consumer demand has clearly affected discretionary spending patterns. While Sony PlayStation 5s are more plentiful, Totoki pointed out that owners are either using the games they already have or aren't buying as many titles to complement their new purchases.

When it comes to gift wish lists — both for children as well as adults — video games are a perennial list topper. Among the toys most sought after by boys in Prosper Insights & Analytics' Annual Holiday Consumer Survey, video game-related merchandise made up three of the top 10 (PlayStation, video games and Xbox). And during the pandemic, when millions of people were stuck at home due to lockdowns and office closures, video game manufacturers and retailers saw record profits.

Gaming companies say demand is down for many of their major titles.Gaming companies say demand is down for many of their major titles.

Video games sales globally poised to dip 4%
But higher prices on essentials like gasoline, food, home heating oil and other needs have had a trickle down effect on the gaming industry. Indeed, by the time 2022 concludes, consumer spending on video games worldwide is expected to be down more than 4% from 2021, The Wall Street Journal reported, citing estimates from Newzoo BV.

Michael Pachter, an analyst at Wedbush Securities, told the Journal that in theory, the gaming industry is recession proof. If people are out of work, as is often the case during typical recessions, they often fill hours with screen time on handheld or traditional gaming devices. But the fact that the unemployment rate remains as low as it is keeps consumers engaged in their work. It also makes this recession an unusual one — if it's one at all.

Inflation is also affecting how people will go about their holiday shopping, or at least has that potential should prices continue to edge higher. In a poll of 4,000 respondents conducted by PricewaterhouseCoopers, more than half (53%) said inflation would impact their holiday spending activity. The costs of transportation, utilities, housing and reduced disposable income were also cited as catalysts for how they'll approach the gifting season.

Higher asking prices on the part of gaming console developers may also be adversely affecting sales volume. Sony Group announced in August it would start selling PlayStation 5's for more, including in select markets within Asia, Europe, Latin America and North America, The Wall Street Journal reported. Sales for the console have since slowed, although they were down even before the price hike.

Supply chains abhor unpredictability, and throughout much of the past year, inflation has made unpredictability a regular occurrence, a reality that has affected how product-based businesses respond to demand from their customers as their budgets get stretched to the limit. And while inflation tempered slightly in October, it continues to handicap the economy as well as the prospect of the nation's overall supply chain achieving some level of normalcy.

In what's becoming a broken record, the Consumer Price Index rose in the latest monthly release from the Bureau of Labor Statistics, this time in October relative to 12 months ago. Indeed, the all items index — which takes into account the rate of consumption of nearly 90% of the U.S. population — was up 7.7% on a seasonally unadjusted year-over-year basis.

The fact that the CPI rose 7.7% came as good news to some economists, who predicted that the annual increase would be 7.9%, according to reporting from Dow Jones. However, several kinds of goods that everyone buys on a weekly, if not daily, basis jumped appreciably. These include food at and away from home (10.9% and 12.4%, respectively), gasoline (17.5%) and heating oil (68.5%), among other essentials.

Imports have slipped every month since May.Imports have slipped every month since May.

Slowing demand has diminished imports 
While the CPI was down slightly from September, consumers continue to spend vastly more now than they did a year ago. Based on a Moody's Analytics review of September CPI data, the average household that month spent $445 more than it did this time last year, CNBC reported. Some families with the financial means are simply paying more. But many are being forced to cut back on the amounts they buy in order to stay within their budgets. This winds up creating supply chain instability for the businesses that produce the items those customers purchase, evidenced by reduced import activity, particularly among retailers. While imports reached a record high in May — with shipping ports processing 2.4 million TEUs, according to the National Retail Federation and Hackett Associates — they've slipped consistently ever since, reaching 2.03 million TEUs in September.

At the same time, though, Americans aren't planning on cutting back when they begin their shopping for the holiday season. On average, they're expected to spend upwards of $930 on gifts for their friends, family and neighbors, a survey done by Gallup showed. That's up nearly $100 from last year ($837) and $805 in 2020.

Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation, said that in addition to high prices affecting import activity and contributing to unpredictability, businesses are also contending with an impending rail strike on the part of the Brotherhood of Maintenance of Way Employee Division. A work stoppage would add one more wrinkle to a supply chain dilemma. But the fact that so many retailers stocked up early will help attenuate what effect a rail strike would have on product availability.

For deal hunters, the day after Thanksgiving — Black Friday — is the can't-miss sales event of the year. From big-box franchise operators to small-business owners, sellers of all stripes and sizes often offer dramatic discounts to encourage people to shop in store or online. With inflation raging, millions of budget-minded buyers will be sure to take advantage of the price reductions while they last.

But a new forecast suggests deal hunting on Black Friday may not be as widespread as it's been in the past.

Only 1 in 5 Americans intend to shop this Black Friday, according to a recent survey conducted by PricewaterhouseCoopers. That's down from 60% who said they would participate in Black Friday festivities in 2015, when a similar poll was conducted.

The PwC Holiday Outlook 2022 survey involved 4,000 respondents, represented by individuals from Generation Z, millennials, Generation X members and baby boomers. Across the board, a smaller percentage of people from each group said they would be buying on Black Friday compared to the findings of previous surveys by PwC. The declining trend suggests the novelty factor of Black Friday has worn off with some buyers.

Despite the pullback, Black Friday still remains popular with much of the buying public, particularly in comparison to other post-Thanksgiving holiday sales events, such as Cyber Monday (celebrated the first Monday after Thanksgiving) and Small Business Saturday. For instance, according to a separate survey conducted by the National Retail Federation (NRF), nearly 115 million shoppers are expected to partake in the Black Friday sales proceedings. And of the 115 million, over two-thirds will shop in a brick-and-mortar setting.

Black Friday remains popular  but not as popular compared to previous years.Black Friday remains popular — but not as popular compared to previous years.

A possible explanation for consumers' waning interest in shopping the day after Thanksgiving may be attributable to retailers making Black Friday a much longer sales extravaganza, occurring over weeks as opposed to a just a 24-hour period. Businesses like Kohl's, Walmart, Best Buy and more have rolled out various iterations of Black Friday events, some of them taking place over the entirety of November as well as December. Phil Rist, executive vice president for Prosper Insights & Analytics, noted in the NRF press release that holiday shopping among buyers is beginning earlier. This suggests that people may not have as much to purchase by the time Black Friday rolls around.

"This year, 18% of holiday shoppers have completed at least half of their holiday shopping," Rist explained. He added that while November and December account for the largest slices of the season, shopping in October has become more popular.

As for how much they'll be spending, customers aren't tightening their budgets all that drastically, even with inflation pushing prices higher. On average, consumers expect to spend $1,430 on gifts, travel and entertainment, according to the PwC Holiday Outlook report. That's just $17 below last year's total ($1,447).

The NRF forecasts retail sales during for Christmas could be better this year than 2021, potentially surpassing $960 billion. That would be a roughly 6% increase from last year's amount.

Returns are inevitable for the average retailer. Whatever they sell and wherever they may be selling it — be it in store or online — retailers can expect at least some of their products will find their way back  because merchandise doesn't fit, doesn't work, is the wrong order or a buyer changed their mind about their original purchase. The process is highly inconvenient both for retailers as well as the customer.

In an attempt to make the return process more seamless, one of the nation's leading retailers is rolling out a pilot program in tandem with a well-known logistics provider.

In collaboration with UPS, Overstock.com plans to introduce a new return process for its customers who need to send back merchandise they purchased, according to one of the company's top executives who briefly spoke about what the program will entail during an earnings call. Overstock.com CEO Jonathan Johnson noted that instead of having customers repackage their unwanted item(s) — which they're currently required to do — UPS will go customers' physical address and pick up the merchandise as-is, sparing them from the hassles associated with packaging and visiting the post office to arrange for shipping.

Johnson said customer satisfaction is always the goal for Salt Lake City-based e-tailer and that includes products they don't want or would like replaced.

"We are launching a pilot program in which returns will now be possible through simpler home pickup options, right from the customer's doorstep that don't require reboxing of the product by our customers," Johnson said, as reported by Seeking Alpha. "Through this pilot, both of our organizations will have the opportunity to better understand customer preferences and enable us to serve up options that align with their day-to-day lives."

Whether they're transported by air or truck, returns are a cost of doing business as a retailer.Whether they're transported by air or truck, returns are a cost of doing business as a retailer.

Returns cost retailers billions in 2021
Returns come with the territory for retailers — and they've had more of them of late. In 2021, for example, approximately $761 billion in merchandise was returned to the original sellers. That amounts to 16.6% of the $4.5 trillion in overall retail sales last year.

Johnson didn't specify during the earnings call exactly when the pilot program would begin — or which part of the country will have first access to it — but said the expectation is it will kick off at some point before 2022 concludes.

While e-commerce has in many ways made it more convenient to shop, online purchases are more likely to be returned than items purchased in brick-and-mortar environments. According to the National Retail Federation, online sales average a return rate of approximately 21%. In 2021, of the $1 trillion in merchandise retailers sold through the internet, more than one-fifth of it in terms of value — $218 billion — was returned. 

Johnson said he's confident that the pilot program will serve both the company's ends as well as customers' by increasing convenience and making returns less complex than they currently can be. The company made headway in this regard during the third quarter by cutting down on the number of large items that were sent back to its warehouses, such as furniture. Johnson said large item home delivery times were down 18% by the end of September compared to the beginning of July.

Ever since the mid-1990s, when the first online transaction is believed to have taken place, the internet has served as an additional avenue to buy and sell products and services. But during the pandemic, for many, it was the only avenue, particularly among retailers. It's little surprise, then, that e-commerce sales soared in 2020, topping $815 billion, up from roughly $571 billion in 2019, according to the Census Bureau. That's a 43% increase.

But with the lockdowns lifted and the pandemic (for all intents and purposes) over, where does e-commerce and online selling go from here? Here are a few trends that will likely have an impact on what e-commerce looks like a year from now:

1. Online sales will pick up steam
While online buying may be down from its peaks in 2020, sales are still well ahead of where they were prior to the pandemic. Due to rising inflation, high fuel prices and customers taking advantage of free shipping, online buying should intensify next year.

A strong holiday shopping season is expected to set the stage for 2023 as a whole. Indeed, online sales in November and December are forecast to reach over $267 billion, according to the National Retail Federation. That would be a roughly 10% increase from last year's total ($262 billion).

Retailers are also dealing with a glut of inventory, due in part to supply chain bottlenecks that have since worked themselves out. Offering deep discounts on merchandise to inflation-weary buyers can help sellers cut down on the inventory they have to carry over into next year. 

What trends will emerge in e-commerce in 2023?What trends will emerge in e-commerce in 2023?

2. Expanded use of automation
To save on business expenses and work around some of the social distancing measures designed to reduce the spread of COVID-19, many companies leveraged automation to supplant or support existing warehousing activities. With retailers still experiencing hiring woes, automation will likely expand its footprint, according to Lydia Jett, managing partner of an equity firm based in London. Speaking at Tech Live, an annual conference hosted by The Wall Street Journal, Jett noted that automation helps to improve the online buying experience for shoppers while streamlining the development process for producers. This includes addressing their frustrations with not having enough labor. Retail and the food service industry are among the sectors desperate for more workers.

3. Rise in social shopping
From Meta to Twitter to Instagram and TikTok, social media saturates the virtual world. Retailers are leveraging social media platforms to better connect with their target audiences and boost engagement. They're not only advertising on the social web but also making it possible for customers to actually buy from there, a concept known as social shopping.

While social shopping is not new, it's increasingly prevalent and will likely expand further in 2023. Kirsten Green, founder and managing partner of a venture capital firm, said at Tech Live that social shopping is a highly effective sales strategy, noting conversion rates are three times higher through the utilization of video rather than static images.

The intimate nature of the restaurant business — both for diners as well as for staff — made it the industry that was (arguably) the hardest hit during the COVID crisis. The mitigation measures dining establishments were forced to impose, like social distancing and use of face masks, created massive supply chain and operational challenges for all involved — many of which continue to this day.

So much so, restaurants of all sizes and types across the country are dramatically reducing the hours they're open for business, based on the results of a newly released survey by market research firm Datassential.

Relative to 2019, the typical restaurant in the United States is open for an average of 6.5 fewer hours per week the poll showed. That's a decline of over 7%. In certain states, however, restaurants have chopped their hours of operation more substantially with Vermont leading the way among states at more than 11 hours fewer per week and D.C. open for 12.5 fewer hours.

Since much of the industry operates on the slimmest of margins, restaurants try to make the most out of every hour that they're open, but a toxic stew of adverse supply chain conditions has forced their hand. These factors include higher food costs, overhead-related expenses (e.g. electricity, rent, etc.) and higher gas prices, a pain point for eateries that rely on delivery as one of their selling methods. 

Restaurants are in dire need of more staff.Restaurants are in dire need of more staff.

Staff shortages weighing on restaurants
For most, however, the main issue is related to staff: They simply don't have enough people who are ready and willing to work. It's gotten so bad, some franchises locations are closing on weekends, which typically comprise the days of the week why revenue is highest. According to a poll by the National Restaurant Association, close to two-thirds of restaurant owners surveyed said they do not have enough employees on hand to effectively serve all of their customers in a timely fashion. Indeed, 1 in 5 full-service operations say they're understaffed by 20% or more.

Jason Birchard, co-owner of a restaurant based in Manhattan that specializes in Ukrainian cuisine, told CNBC that he's having troubles with both recruitment and retention.

The restaurant segment in the Big Apple has been particularly hard hit. Datassential noted that of the 15 zip codes with the largest weekly decline in operating hours, 12 were in New York City.

Wage growth can help with recruitment and retention, but with rising food costs taking up even more of their budgets — nearly 90% say they're paying more for ingredients the National Restaurant Association poll found — doing so can compromise their profitability.

In addition to the worker shortage, other contributing factors to the reduction in hours include fewer people eating out, less traveling to and from work due to the growth in telecommuting and the ongoing impact the "Covid hangover" is having on social behaviors.

From rampant flooding to penetrating winds that ripped roofs off of dozens of homes and businesses, Hurricane Ian was one of Florida's most devastating storms in its history. That's saying something, given the Sunshine State has been on the receiving end of more of these storms than any other in the continental U.S. In fact, according to the National Oceanic and Atmospheric Administration, Ian was a billion-dollar disaster, the 15th weather-related catastrophe to cross this threshold in 2022 so far.

Yet despite the damage Ian caused to Florida, its economy and to area businesses, major supply chains appear to have emerged relatively unscathed, particularly when compared to other recent natural disasters and weather anomalies.

Between large swaths of Interstate 75 being shut down for days due to flooding and numerous orange and grapefruit groves destroyed by heavy rainfall, early indicators certainly suggested that supply chains were bound to feel the effects, evidenced by longer lead times, higher prices and reduced supply. But well-choreographed and implemented recovery work has helped the state bounce back sooner than expected. Indeed, on Oct. 1, the Florida Department of Transportation reopened the 14 miles of I-75 that were closed off and the fertilizer industry — which orange growers depend on for production purposes — didn't suffer the blow that some farmers anticipated.

Florida is recovering nicely following Hurricane Ian.Florida is recovering nicely following Hurricane Ian.

Fertilizer producers down, but not out
Mosaic, the world's leading producer of concentrated phosphate and potash, said in a statement that Ian caused "modest damage" to its Tampa-area facilities, which was enough to likely diminish production output by between 200,000 and 250,000 metric tons as 2022 concludes. While that may be a loss for Mosaic, other leading fertilizer companies weren't impacted, Supply Chain Dive reported, so a ramp up in their production may be able to make up the difference.

Jason Miller, associate professor of supply chain management at Michigan State University, told Supply Chain Dive that it definitely could have been worse for the state's supply chains, recalling how the freak ice storm in Texas in 2021 led to substantial disruption for refiners and petrochemical manufacturers.

"Given the geographies involved with Hurricane Ian, we're not looking at anything nearly of similar magnitude here," Miller explained. As the Federal Reserve Bank of Dallas reported at the time, an estimated 80% of basic organic chemicals capacity was offline in the immediate aftermath of the ice storm, which struck in early to mid February of 2021. A month later, 60% were still unable to restart their operations.

Comparatively, business conditions have improved rather quickly for Florida, more than a month removed from when Ian first came ashore. The state government has likely played a role by being intimately involved with recovery efforts. Governor Ron DeSantis, in tandem with the Department of Economic Opportunity and 10 other state agencies, created FloridaStormRelief.com. While the website is primarily for homeowners, it also has resources for area businesses, including zero-interest bridge loans, business recovery centers and economic injury disaster loan programs.

Although they was the norm throughout much of 2021, bottlenecked conditions at the Ports of Los Angeles and Long Beach have largely dissipated. But congestion is now rampant with several other leading port authorities, on the East Coast as well as in the Gulf. In an attempt to reduce unnecessary container volume, Port Houston intends to impose a dwell fee to shippers that don't remove their containers once they're emptied.

As noted on its website, Port Houston says it will begin to impose a dwell fee in the coming weeks. Poised to be effectuated on Dec. 1, the sustained import dwell fee will cost shippers $45 per day on all loaded imports for every additional day containers are allowed to remain at the terminal. Shippers at Port Houston have seven days to get their containers out of the way once they're unloaded, so the per-day penalty would theoretically begin on the eighth day they're there and then recur every day thereafter until the containers are cleared.

Additionally, Port Houston also plans to impose an "excessive dwell fee," which will go into effect when a public comment period about the excessive dwell fee concludes. It's expected to remain in place for 60 days but will only be used in what Port Houston describes as "acute" circumstances. It will also not run concurrently with the sustained import fee. In other words, it will either be one or the other.

Roger Guenther, executive director for Port Houston, said the authority is going to these lengths to speed the flow of traffic into and out of the port.

"This new fee structure is aimed to help mitigate the issue of long-dwelling loaded import containers by incentivizing cargo movement," Guenther explained.

Import volumes continue to climb for port authorities throughout the U.S., not just the West Coast.Import volumes continue to climb for port authorities throughout the U.S., not just on the West Coast.

Port Houston smashing import records
Unlike ports on the West Coast, where container volume is down substantially from where conditions were last year, imports haven't let up for Port Houston. Indeed, September was the second-busiest month on record for container cargo volumes, bested only by August when total container volume was nearly 382,850 TEUs. That's an increase of 20% compared to the same month in 2021 and up nearly 47,476 TEUs from Port Houston's previous all-time record, which was in May.

Container dwell fees are a common tactic port authorities use to encourage ocean carriers to be more mindful of other shippers, since there is only so much room for movement. The Port of Los Angeles and Long Beach have threatened to enact such fees numerous times over the last two years, but they've been tabled because the threats alone made a difference. Indeed, ever since Los Angeles and Long Beach announced the program on Oct. 25, aging cargo is down 69% combined, according to a press release. As a result, the authority said it will postpone consideration until mid November. 

Amid record inflows, Port Houston is going to other lengths to maximize movement and flow. This includes creating temporary space at area terminals and increasing investment in the authority's container yards.

Legislators, legislatures, automakers and much of the automotive industry are putting the pedal to the metal on electric vehicles. Whether it's the state of California poised to ban the sale of gas-powered vehicles by 2035 or the Inflation Reduction Act spending billions of dollars on alternative energy resources, the full court press toward EVs and hybrid vehicles appears to be underway.

Here's the problem: The batteries that EVs rely on to move require several rare earth minerals that the United States has very little of. If demand for EVs intensifies, as it's expected to over time, the lack of these key minerals will prevent manufacturers from producing at a rate that's quick enough to satisfy that elevated demand.

In an attempt to address this brewing problem, the federal government is working with key stakeholders to shore up its rare earth minerals supply chain.

The one it's starting with is lithium. Found in smartphones, laptops, wireless headphones and more, lithium is used in a wide variety of electronics because of it conducts electricity, creating the positive charges necessary for current to flow. But the United States has next to no lithium from natural sources. Indeed, according to estimates from the U.S. Geological Survey, the U.S. is home to less than 4% of the world's lithium reserves.

Venkat Srinivasan, director of the Argonne Collaborative Center for Energy Storage Science at Argonne National Laboratory, told Supply Chain Dive that it's virtually impossible for the industry to mass produce EVs given this reality.

"Where is the supply? We don't make electrode materials," Srinivasan explained. "We don't make materials that go into the rest of the battery. We don't process the minerals. We don't even mine them."

Thus, when automakers and their sourcing partners need lithium and other vital minerals for fabrication, they have to import them from overseas, typically from China, Argentina and other countries where the mineral in question mined and found in higher quantities. But this activity winds up raising automakers' costs, which are passed on to the consumer.

Government is supporting lithium fabrication efforts
To bridge the divide, the government has awarded nearly $3 billion in grants to lithium suppliers. Speaking to this effort, President Joe Biden said 20 companies of the 200 that applied for these grants were ultimately given the funds.

"Together, these 20 companies are going to build new commercial-scale battery production and processing facilities all across America," Biden said. "They're going to develop lithium to supply over 2 million vehicles every year."

The White House has gone to other lengths in this matter as well. Earlier this year, the White House released the details of a $35 million investment in a magnet processing plant. Working with a company based out of California, the goal is to increase the output of rare earth minerals by optimizing extraction processes, so manufacturers have the materials they need to produce at a higher volume.

The Department of Energy is also working toward increasing refining capacity for other must-have minerals, like cobalt, nickel and graphite. It's a $140 million program that will create a critical minerals refinery that it says is the first of its kind.