Keep regional, domestic supply chains strong
There is an old saying that armies march on their stomachs. The phrase is a warning to generals to not over-extend their supply lines and leave their armies without needed supplies.
Somewhere along the way, the push toward a market globalization has caused economists and politicians to forget that the maxim equally applies to national and regional economies. Supply chain disruptions such as last spring’s nationwide shortage of toilet paper to having car manufacturing plants idled because there aren’t enough computer chips to go around show just how fragile the system is.
A case in point was this past week as the world watched as crews worked to free a quarter-mile-long container ship that was stuck and blocking traffic in the Suez Canal.
Hundreds of similar boats on either side of the canal were stalled as work progressed on clearing the important waterway. About 12% of world trade flows through the Suez Canal. This makes it a strategically important choke point. The weeklong shutdown of trade cost companies and ultimately consumers millions of dollars in additional shipping charges.
According to S& P Global Platts, about 80% of world trade travels over the oceans and the cost of shipping a 40-foot container has gone up from $1,040 last June to $4,570 at the beginning of March.
For policy makers at the state, regional and national level this most recent disruption needs to serve as a wake-up call to shore up transportation infrastructure and work to end an over reliance on global trade ensuring that domestic resources and manufacturing continues to be strong.
A good example of this is the roll out of the COVID-19 vaccines. Countries, such as the United States which has the production capacity, have greater widespread access to the vaccines. People in places without that production capacity are forced to wait.
This is especially important in Wisconsin where mining, manufacturing and farming has been the threelegged stool of economic stability for generations. Policy makers and economic leaders must work to reduce the impact global incidents can have on manufacturing and commerce. Wisconsin must do what is necessary to keep local and regional supply chains viable and competitive with international trade.