The Problem of Wanting It All Now

By Jock O’Connell

We are now more than a year into the logistical equivalent of seeing six or seven gallons of water being poured into five-gallon buckets. Global supply chains are clogged. Ports here and abroad are congested. Warehouses are stuffed to the ceiling. Clearly, the existing goods movement infrastructure has been no more able to cope with the demands that have lately been placed on it than all those five-gallon buckets.

What to do?

There is no consensus, except to reject the swamped-bayou strategy of just hanging on until the waters recede. The Port of Long Beach is opting for longer gate hours in hopes of easing its congestion. The Port of Los Angeles is banking on enhanced information-sharing to make its container flows more efficient.

But most of the Big Thinkers, once they have gotten through the initial run-in-circles, scream-and-shout phase of analysis, appear to favor investing in bigger buckets. And why not? We finally have a President who is serious about infrastructure and a Congress that’s willing to pony up some funds, albeit in sums pathetically inadequate to the task.

To be sure, even the Buy-Bigger-Buckets crowd probably understands that the wave of imports flooding America’s ports since the onset of the pandemic last year will eventually subside and will likely do so well before more hardware can be deployed to alleviate the stress that might soon be much less stressful. The goal of most analysis is to get ahead of events, to prepare for the next flood, and most importantly to spend the new federal money before it’s taken off the table.

So order books are being compiled, and plans are being drafted for bolstering the nation’s goods movement infrastructure, especially in and around its ports. Billions will be spent, much of it wastefully if history is any guide.

But wait. What if this isn’t an infrastructure problem? What if, instead, it’s the result of a psychological defect that has been inflicted on the consumer market?

Back in mid-20th century America, my dear, departed mother would regularly peruse the thin, black-and-white pages of the famed mail-order catalog published by the Sears, Roebuck Company of Chicago, Illinois. It was as close as Americans of that era got to online shopping. From time to time, mother would spy something she liked and that she couldn’t obtain from a local department or hardware store in Portland, Maine. So she would draft a letter she would address alternately to Mr. Sears or Mr. Roebuck (doing business was a personal matter to mother; no faceless corporations for her). Since this was also before widespread use of personal checking accounts, she would further be obliged to trudge downtown to the Casco Bank & Trust to obtain a cashier’s check to cover the purchase price and the shipping charge. (No Amazon Prime then.) Finally, she’d entrust her order to the then highly regarded U.S. Post Office, which would take a few days to convey her order to either Mr. Sears or Mr. Roebuck in far-off Chicago. Then she would wait, with more patience than she normally had for her son.

Back then in the halcyon years celebrated by conservatives and septuagenarians, Dwight Eisenhower was in the White House and a package containing my mother’s order would normally show up in four to six weeks’ time. Its arrival was always a special occasion, and we prayed that she would not be entirely disappointed if the color was not quite what she had imagined or that the size was too small or large. But the point here is to remind us that she and millions of other American consumers considered several weeks to be an entirely reasonable period to wait for an order to arrive all the way from Chicago, Illinois.

Today, we have lost all patience. We simply can’t wait. We want that package to arrive tomorrow, if not later today. How did this happen? How did we become so impulsive about our consumption? What would mother think? (Okay, let’s not go there.)

The fault, obviously, lies with a man named Jeff Bezos. Long before the pandemic prompted homebound consumers to entertain themselves by ordering stuff they didn’t really need, Mr. Bezos taught Americans that they could have their orders delivered to their front steps with alacrity bordering on celerity. He, more than the New Math or any other cultural phenomenon of the early 21st century, changed us, a nation otherwise accustomed to heroic commutes to and from work, into foot-stomping children on a sugar high.

And it was not just Americans that Mr. Bezos and his followers (like the Walton clan) have transformed. This September, for a change of scenery, I rented an apartment in Vienna, a gracious city in which I had spent an undergraduate year at a time much closer to the Vienna of “The Third Man” than to today. To my dismay, I discovered I could not escape Amazon. The only question was whether my order would be shipped to me by Mr. Bezos’ minions in Bavaria, Czechia, or Slovakia. Danke für Ihren Einkauf, Herr O’Connell.

Now what has this to do with the crisis at the ports? Plenty. To be able to satisfy his customers’ expectations of speedy delivery, Mr. Bezos has been obliged to pepper the landscape with various warehouses, distribution facilities, and what he calls fulfillment centers, many of them large enough to house every single homeless person in America. After all, you simply can’t do next-day, let alone same-day delivery if you’re dispatching shipments the old-fashioned way from a handful of storehouses scattered around the country. You’ve got to be in the next town.

So Mr. Bezos (and those retailers who copied him) went on a colossal building spree. His e-tail giant alone reportedly opened over 100 new fulfillment centers, sortation centers, regional air hubs, and delivery stations across the U.S. just while I was away in September.

The port congestion issue arose, I submit, because Amazon and its rivals had made near-instantaneous home delivery a highly desirable alternative to the old in-person shopping model that was effectively being shut down during the first several months of the pandemic. This resulted in a huge upswing in demand for imported goods, but not so much from consumers themselves as from the rapidly growing number of fulfillment centers and delivery points Amazon and others were building. The imperative of keeping its own far-flung shelves adequately stocked with merchandise broke the nation’s import supply chains, not the orders placed by actual consumers. In effect, Amazon and its competitors have not been fulfilling consumer demand so much as they are filling their fulfillment centers. No wonder that ports are clogged and inland supply chains are now overwhelmed.

Despite the exaggerated load this has placed on the goods movement infrastructure, Amazon, Walmart, and other retailers continue to promote next-day or second-day delivery for most consumer items. That requires maintaining extensive inventories in more locations than would otherwise be needed. And, so long as they build more and more storage facilities, they will be obliged to import vast quantities of merchandise.

In summary, it’s not consumers’ orders that are congesting the system; it’s those merchandizers who insist on fostering expectations of immediate delivery.

So what’s the answer to supply chain congestion? Instead of addressing today’s crisis as an infrastructure deficiency, suppose President Biden addressed the nation and, in a suitably avuncular manner, told us all to slow down, take a deep breath, and count on getting that bedsheet or yoga mat we ordered next week rather than tomorrow.

Perhaps Mr. Bezos himself could help ease the logistical strain by offering financial incentives for deferred deliveries. Instead of charging extra for same-day delivery, Amazon could offer a 5% discount on merchandise slated for delivery in a week or 10% on orders that would be fulfilled the week after that.

Imagine how much Amazon could consolidate its fulfillment centers. Imagine how much less it would have to import if it moderated its ASAP delivery policy.

Imagine how much my patient mother would have saved.

Disclaimer: The views expressed in Jock’s commentaries are his own and may not reflect the positions of the Pacific Merchant Shipping Association.