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Bullwhip Effect Impacting Shipping, Ag Products

There are many reasons why the supply chain is broken besides the pandemic. Recently, a phenomenon called the bullwhip effect is starting to impact what reaches store shelves.

When consumers start making small, sudden, and unpredictable changes in their shopping habits, that impacts the entire chain.

“This weird disruption that happened to all of consumer demand was especially felt in industries that had a longer supply chain,” says Trey Malone, extension economist with Michigan State University. “That, I think, is largely because of this massive adjustment that we’ve had to make in all consumable products. It matters especially for agriculture where you have so much of a spoilage concern and so many products that can’t afford to be sitting in a shipping container for months and months as opposed to weeks and weeks.”

U.S. ports are packed with backlogged barges. Danny Munch, associate economist with the American Farm Bureau Federation says this purchasing behavior is causing congestion.

“During COVID, we saw this switch in consumer purchasing behavior from buying services, going out, to a lot of good purchasing, so e-commerce,” he says. “When that happens, there’s much more demand for products that come in containers and on barges, which puts a lot more pressure on our ports. Our ports are infrastructurally limited by the number of cranes, workers and so forth in their ability to process these new shipments.”

Between historic damage from Hurricane Ida hitting the Gulf, astronomical international and domestic shipping costs, worker shortages and other issues, Malone says he isn’t sure where this melting pot of concerns will go.

“On the export side, there’s an increasingly globalized supply chain within agricultural and food products, but that increasingly global food chain relies on very expensive shipping and sometimes outdated shipping models,” he says. “I think we’ll see a lot of pivots towards mechanization throughout most supply chains in the U.S.”