So the first bottleneck happens before the thing is even really made. It's difficult to overstate the impact that China, Thailand, Vietnam, and Malaysia's zero-COVID policies have had on global supply
chains. The famous example is the 30,000 people that just got locked in Shanghai Disneyland. What happens is, they see a single case, and they'll shut down a city of 4 million—they'll shut down factories, they'll shut down whole ports. The seven busiest ports in the world are in China. So imagine the effects of shutting one of those down for a day, much less a month. So, the first real problem is that people can't even get their stuff made.
The second bottleneck depends on who makes these sneakers, right? If it's a really big company, maybe they reserved all of their shipping well in advance, so they're good. But tons of global shipping happens on the so-called spot market. People are just just like, “Hey, I know that in three months I need a shipping container, what's the going rate?” Well, pre-COVID, it costs you $2,000 to ship a container of goods from a port in China to the Port of LA in Long Beach. Today, it can cost you up to 10 times as much. That is, if you can get onto the ship, and many people cannot, at all, at any price. So there was no extra capacity in that system.
I want to focus on the origin of the sneaker—its start as a fracked gas. Not to be a five-year-old, but:Why?Why does it move in that order? Why start in the panhandle and then go all the way to China? Isn't there a more efficient way to do this?
I'm glad you’re being a five-year-old, because the whole book came out of my five-year-old self picking up things around me being like, where did this really come from?The whole system is designed to obscure the origins of everything around us. We care so much about where our eggs come from—did my chicken get treated well?—but where did a sneaker come from really?
The reason that these fracked gases are turned into plastic in China is because that does require a certain level of expertise. There's a whole lot of mechanical-engineering expertise. And the more mechanized it is, the more people specialize, the more that those supply chains get rooted in one place. It's why all of our more advanced microchips get made in Taiwan. You can't just rip up the supply chains and move them somewhere else. People have tried, believe me.
Why is there no extra capacity in that system?
Two reasons. Companies pulled back on reserving shipping capacity at the beginning of the pandemic, because they thought we were going to have a repeat of the Great Recession of 2008. [But] the opposite happened: since about May of 2020, Americans have been on a shopping spree. The amount of money that people were spending on hospitality, vacations, or services—the amount that was reduced—the amount that we spent on goods almost exactly increased. That’s hundreds of billions of dollars worth of goods. We are buying like crazy and shipping companies cannot increase capacity fast enough to meet that demand. There aren't enough shipping containers, there aren't enough chassis for the shipping containers to ride on once they get to port, blah, blah, blah. So then, let's say your goods get into the port of LA. The Port of LA is doing a million containers a month now. That's the new normal—that is higher than any previous record. So, every month, they're shattering all previous records,