Why Global Supply Chains May Never Be the Same | WSJ Documentary

- Watch this. Exhausted, can you believe this? - So they were supposed to deliver it in October. - This will be an update on the kettlebell shortage in 2020. - I just want my shoe. Give me my shoe, please. - So it was supposed to be November. No. Then December. - Bring me my PlayStation. Am I wrong to want this, brother? - I mean, everything sucks lately. - Take my money. Take my money, I don't want it. Give me my shoe. - Every time I check my email, it gets stuck here. I don't even know what that means. - Tonight, one word sums up the feeling in every line of the

supply

chain: frustration. - Well, shortages and delays in the

global

supply

chain threaten total paralysis. -When the pandemic hit, companies anticipated that the COVID recession was coming.

They thought demand was going to go down, but a funny thing happened. The opposite of what all these companies and economists predicted happened. Demand skyrocketed, people bought things like crazy, and now supply

chains

are choking on that record demand. Everyone has had the experience of not being able to get something and everyone has had the experience of paying more for something. Before the pandemic, most of us took it for granted that we could do things faster and faster. E-commerce made it seem like everything was just around the corner. But that obscures what was a 14,000-mile trip around the world.

It took months. And when you add up all the automation, all the algorithms, all the hundreds of people who had to touch those goods or transport them in some way, it is, in total, one of the most complicated efforts that humans have ever been involved in. and yet it happens millions of times a day, and we take it for granted because all of that has developed behind this ultimate convenience of one-click e-commerce shopping. But the pandemic showed us how unsustainable and unrealistic that expectation is. (thoughtful music) So consumer electronics like USB chargers seem to be available to us, right?

We can get it the

same

day. - USB chargers are an interesting product. They are relatively simple. The key is that those chargers don't sell for a high price, so you have to keep labor costs low and really focus on efficiency. - The invention of the shipping container and shipping made it cheap enough to move manufacturing to where labor costs were lower. - Global supply

chains

have really brought us a lot of products that we otherwise wouldn't be able to have as much variety... Or as attractive costs as we see. When you buy a product off a store shelf or online, it's actually the end of a journey that might have started a year ago in a factory that might be half a world away.

Vietnam has been attractive due to the relatively low cost of labor. - If we take the example of a simple USB charger, it is assembled in a factory in Vietnam and then usually placed in a shipping container that travels on a barge to an oceanfront port. There, they load it onto a ship to travel across the Pacific Ocean. The journey across the Pacific Ocean can take between 20 and 30 days. Working on a boat can be like living in an office you can

never

leave. The stakes are high and often mundane and boring. Because sailors tend to be confined to these ships and it is almost impossible for outsiders to get on or off them, this is part of the supply chain that remains invisible to most of us. - Surveillance (indistinct) is carried out visually and also by radar. - Fortunately, some of these sailors like to record their experiences. - The officer of the watch is responsible for the navigation and general condition of the ship.

Safe navigation of the ship is the top priority. - The fog is so thick in this area that we can't see around us, so we have to use radar. - Each of these container ships can carry up to 10,000 containers, but they can have a crew of only 20 people, so it puts enormous pressure on each sailor to do their job because if something goes wrong, the results will be catastrophic for supply chains. . - The last thing we want is for containers to fall into the sea if we ever have bad weather. We monitor the general condition of the boat, check the mooring lines and look for suspicious activity, such as stowaways or pirates.

Sea conditions like this can last for days; the relentless pounding, the endless pitching and rolling. I can only describe it as living under the turbulence of an airplane 24/7. - The largest container ships are as big as an overturned skyscraper, and one of the reasons they have become so large is that when you look at all the costs, crew, fuel, etc., the bigger your ship, the more money desire. The more you can earn on each container, the cheaper it will ultimately be to ship these goods. But the larger these ships are and the more efficient these supply chains are, the worse the situation will be when there is a bottleneck at one of these single points of failure. - The 400 meter long Evergiven became stuck on Tuesday morning and ran aground due to strong winds, apparently after a power outage on board. - More than a dozen ships wait to pass through the Suez Canal.

That is one of the busiest trade routes in the world. - And every day of delay, more than $9 billion in goods get stuck, which translates to about $400 million per hour. - More and more containers are arriving from Asia to us and, of course, we do not send anything back. (upbeat music) - Now we see a lot of boats in San Pedro Bay. Eventually, that payload will land. Eventually you will reach the beaches. - As ports get larger, as more and more flows pass through larger ports, they become single points of failure in a once stronger

global

supply chain. - The Port of Los Angeles and the neighboring port, Long Beach, account for 40% of our US imports and nearly 30% of US exports, demonstrating how critical this gateway is to the US economy.

We have more than 15,000 members of international longshore and warehouse unions working on the docks. - My job as a stevedore is to assist in operations that move cargo through the terminals of the ports of Long Beach and Los Angeles. What I usually do is drive a UTR, which stands for "utility tractor equipment." It's just kind of a compact truck that's strong enough to haul that tonnage. So what I do is take the freight from point A to point B, to a designated spot in the yard, to stack it and have it picked up by outside truckers and taken to the retailer's destination. - We have been averaging 900,000 container units for 14 consecutive months.

It used to be a really good month in our busy season. - We use giant ship-to-shore cranes to unload containers. Normally, it takes three to five days, but with all the problems we are having now, productivity is suffering a lot. It takes up to two weeks to process a ship that would normally take three to five days. - Once a container is at the dock, a combination of humans, robots and software will pick it up and move it to container stacks within the port itself, where it will be sorted and reused to make it available for trucks or rail to take it out of the port. port. - There's no space.

We have gone even further up the pilings so that our land cranes have to dig, and we have also used every available square centimeter in our ports to place containers. And it is very, very difficult to remove them in a timely manner. - Ports are, in some ways, surprisingly democratic places, which means they are often very controversial places. There are the dockers, which is an extremely strong union. There are the terminal operators, there are the city of Los Angeles or Long Beach, which actually owns the port, there are the ships that arrive, and finally there are the drivers that pick up the containers from the port.

If you want to make a change, maybe you operate the port 24 hours a day because you're trying to clear a backlog, no one owns the entire system and can just dictate that happen. There has to be consensus, and consensus with these groups of people is very difficult. - Congested ports and higher shipping costs have threatened to derail our nation's economic recovery. - After weeks of negotiation, the Port of Los Angeles announced today that it will begin operating 24 hours a day, seven days a week. - It is no use keeping a terminal open 24 hours a day in the hope that truckers will come pick up a load at 3:00 a.m.

Because if they do, they have to bring it somewhere. So, you don't just need to get a trucker who is willing to arrive at 3:00 a.m. m., but you also have to take it to the distribution center and that distribution center must be willing to accept the load in the middle of the night. - Let's try everything. We are increasing our start hours, the number of days we work, we will work overnight when necessary, but we are also asking others to step up and trying to find new ways to take the load off. - We can't be a one-man show when it comes to 24/7 operations.

We rely on terminal operators to order work and the rest of the supply chain to also open 24/7. When the docks are full, that means all the others are not working properly either. And we can't really do anything about it until the other aspects of the supply chain start working properly. - When there is congestion in a port like this, it just reverberates and the congestion gets worse and worse. The more shipping times are reduced, the fewer ships there will be to carry empty containers back to Asia. So the whole system is like a traffic jam. What begins as a person gawking at an accident soon turns into gridlocked traffic for two hours, for thousands of cars.

Most products, such as our USB charger, when they leave the port, are transported a short distance by truck to the hinterland region of the empire, where they are processed in a warehouse before being distributed to the rest of the country. After unloading our USB charger from a shipping container, the next leg of your journey is on a long-haul truck. - Okay, right there. I might get lucky and get drunk early. I'll probably be here for about an hour, I hope. There could possibly be three. We'll see how busy they are today and what's... what their schedule is like, how fast they are.

I'm not filming, so I'm not making any money. So part of the problem is that when you sit and wait all this time, the wheels don't turn, you're not making money. I am a professional truck driver. In total, I have been driving a truck for more than 30 years. - There are 19 pallets. Do you want me to carry it on the floor or do you want me to double stack it? You're not going to take another load, are you? - No, how much does it weigh? I am a highway driver. I'm usually gone two weeks at a time, about 3,500 to 4,000 miles a week, hauling all types of cargo.

Everything from household items to rice, water, beer, to... You name it, you put it in that truck and I'll haul it. - The biggest stress in the long-haul trucking industry is that there are not enough drivers willing to do the job in the United States. Now, the American Truckers Association has projected that by 2028, the United States will be short 160,000 truckers. We're talking about an $800 billion a year industry. It moved 70% of cargo in the United States by value, according to the Department of Transportation. And without it, we would have paralysis. He wouldn't get the things he's used to on store shelves, nor would he have them delivered to his door. - I started studying the industry 15 years ago.

I was looking at the labor process and the work that truckers do and what had happened to it since the deregulation of the industry in 1980. The industry has been talking about the current driver shortage since at least 2005. The problem with the trucker The shortage does not It is due to the lack of people who have been interested in this job, who have taken the trouble to train for this job. In reality, there is a shortage of people willing to do that job long-term, and that is fundamentally a retention problem, not a shortage of drivers. - Well here we are.

Good support. Looks like there's a mess up here. This could take a long time. - Trucking used to be one of the best manual jobs in the United States. The industry was almost entirely unionized by the Teamsters Union. Union truckers earned up to 20% more than even unionized steel or auto workers. It was one of the best jobs I could get, and when I got one of thosegood jobs, he was likely to stay there until he retired. And what happened was that the industry was deregulated in 1980. The union was expelled from large segments of the industry, and wages and working conditions followed. - Driving trucks is a manual job.

There's nothing glamorous about it. Most everyday people think, "Oh, anyone can drive a truck." They don't take into consideration that you have moved away from your family, you work long hours. I normally work 14 hours a day. My salary structure is based on everything per mile. You have to manage your time available to drive, so you can do it and still take your 10-hour break. How long are you going to wait to get drunk? How long does it take you to charge? Your clock is ticking and you are losing time that you can drive. - The big limitation for these drivers is that they can only drive a limited number of hours a day.

There are federal rules, they have to record the hours they drive and the hours they work. Now it is done electronically. - This clock has a lot to do with when you can schedule your appointments. (mumbles) time, legally you can't drive. If they catch you, they will shut you down. - The typical long-distance truck of a large company will only travel on the highway, generating income, between seven and eight hours a day. Another seven hours or so of that day will be waiting, doing other types of unpaid work. And then for 10 hours, they have to take a break.

You're not paying the driver for the vast majority of that time, you're really just paying them for the time they drive. New drivers could end up getting paid around 30 cents per mile. What that means in terms of total income is that a new driver could earn between $40,000 and $45,000 today, and in many cases it is not even the minimum wage. The highest-paid drivers in that long-distance segment can earn up to approximately $60,000. An experienced driver for top companies can easily earn over $100,000 a year. - There are about three and a half million truck drivers in the United States, there are 10 million people in the United States who have the type of commercial driver's license that would allow them to drive a truck, so that is a measure of the number of people who' We have already toured this industry.

So one of the peculiar things about trucking and trucking in the United States is that while every other part of the supply chain has consolidated and the big ones have gotten bigger, trucking remains incredibly fragmented. So small trucking companies, which of course account for most of the freight transported in the U.S., have limited leverage, right? They sell their services in a market where freight forwarders and carriers have all the advantages in terms of data, in terms of being able to set rates. And so, for those small trucking companies, in terms of loads, it's a matter of "take it or leave it." - My company name is Avalon National LLC.

We are based in Cassadaga, New York. Right now we have about 11 trucks and we are struggling like everyone else. Driver turnover, ours, is increasing now because we lost some good drivers and we can't replace the good drivers we lost. - We really had to work to make sure that our loads paid well enough, our drivers, who were currently on the road, kept moving, busy, completing those loads, but also keeping in mind that they are human and have a family and everything at home too. Wait, this is a driver. Hi Rocky, I'm Ashley. You're ready to pick up that load a little later.

She said, just work your magic and try to get there when you can. They know you will be a little late due to your delivery time. Very good, drive carefully. We have had trucks stopped because we did not have a driver, which is a big disadvantage for us. - It's something I shouldn't do, but again, I should because I'm a low driver. So I'll drive the truck myself, it's that critical. I've owned a couple of companies and it's a tough business. There are times I can't even go back to sleep. I wish I could, but I can't.

I have too many worries all the time. To hire more drivers, we have increased our wage to 71 cents per mile. That's a pretty good wage these days, 70 cents a mile. We are trying to improve our benefits a little. It's no longer the great cowboy experience it used to be. It's more complicated. - The laws, the regulations, put you against the wall to be able to meet not only your deadline or your appointment to have your cargo delivered, but now you are fighting against the clock to have a place to spend the night safely. . There is not enough space to park all the trucks on the road for a 10-hour period.

So if you don't park early, they won't park you. Or you can be like some of these guys who just pull over on the side road, which is extremely dangerous. And I come in to turn on something to watch on TV, and I usually sleep about seven hours a night. So by the time I eat and watch about an hour of TV, I'm done. Hello, give me a monster cookie to go. I'm probably running as hard, or harder, than I have ever been in the entire time I've been driving the truck. I am 62 years old and I am trying to last until I am 70.

God willing, my health maintains itself, I will last those eight years. - So there's a lot at stake here. The average truck driver is aging and not being replaced. If these dire predictions come true, within a decade, we will be looking at something resembling paralysis for the trucking industry. - This is really important right now because we are in this period of transformation. We are moving from big box supply stores to increasing e-commerce shipping. And e-commerce depends much more on transportation than on the large supply chain. - The ease of shopping nowadays, online, Amazon, that kind of thing, where you use your phone and you can, for God's sake, literally buy your groceries, you're going to get it one way or another, how much are you going to get it? pay for it?

How long do you want to wait? In 2021, people don't have a lot of patience to wait for what they want because they are so used to being able to click, click, click and have it on their doorstep tomorrow. But everyone needs to remember that no matter what you have, it got there by truck. - So when our USB charger is on a truck, your next stop will inevitably be some kind of warehouse. Often, if we talk about e-commerce, it is what is known as a fulfillment center. - Hello, everyone. Yesterday we received 15,154 units, eight ASNs and six sellers. - Come on, right up, left.

One two three four five six. - One two three four. - As with trucking, working in a warehouse is a physically demanding job and that is one of the reasons companies have problems with worker turnover and retention. - It's going to UPS. Take it with you so we can (indistinctly) the corresponding box. You have to be fast, fun and friendly. You have to be focused and not get distracted. When you have to lift boxes all day, it's like... You come home sore and you're like, "Oh, I'm so tired." Most days it is tolerable. Then some days, it's like, "Ugh." It is exhausting. - Everyone knows how to make a box, right?

Short and simple. Just so everyone knows, this is the bottom of the box. - They are all new, they are all officially joining in anticipation of working tonight or tomorrow night. People we probably contacted yesterday. So you're literally talking from recruiting to onboarding, being on the floor in three days. And if I could go faster, I would. - The shift to e-commerce means that even before the pandemic, the fulfillment center industry was struggling to find the space and workers to keep up. - The COVID-related surge in e-commerce and direct-to-consumer commerce completely blew up our business and our entire industry.

And what's happening is that it's a little bit like a snake eating a deer, that your supply chain is the snake and the supply chain has this big lump running through it as it's being processed. In a way we anticipated the coming bump. Yes, I'm nervous because there are still more limitations. It's not a deer that the snake swallows, it's a lot of deer, right? In its simplest form, a truck will deliver the product to us. We will count that product. We will verify that product. We will put that product in a storage location and then wait for an order.

An order will come. We will choose that product. We will package that product and then deliver it to the appropriate carrier. So you have the inside and the outside. If the input is greater than the output, the space that the warehouse can manage is limited. We've managed the space here by leveraging our optimization tools and leveraging our technology. We have goods-to-people robotics and people-to-goods robotics. We are expanding both here at the facility. So one of the big advantages of new automation is that it is very flexible. With the robots here, we are two weeks away from Black Friday and we are literally inducting robots right now to increase capacity.

So Vert is really using technology to drive the next generation of what we're trying to do from a distribution standpoint. I am at the forefront of trying to create technology and enable alternative networks to Amazon. Amazon has really defined fulfillment, so they've opened the doors and the rest of us are now finding creative ways to support it. - On Amazon there is something known as "the promise." The promise is "we'll get your products to you in two days," but of course Amazon has been raising the stakes its entire life as a corporation, so the promise became one day, the promise became the

same

day, the promise turned into three hours.

To achieve this quickly and efficiently, you need to automate it as much as possible. Amazon, of course, has been a leader in this type of automation, but now everyone else is following suit. - We are a global third-party supply chain provider. On the Indianapolis campus, specifically, we have 12 distribution centers, approximately four million square feet of distribution space. We use robots and technology in our facilities because we want to be able to get merchandise to market quickly. That Bombay classifier is fundamental to the process of what we do. From the time we put the Mumbai sorter into operation until now, we are moving goods out of those facilities much faster thanks to that level of technology.

Another piece of technology that is essential is robots. Basically, these robots allow our teammates to pick up much faster, do so more safely, and be able to walk less within the facilities. If you look at how we used to pick manually, we picked about 70 units per hour. And now, with these robots, we pick up 140 units per hour. There's a speed component, obviously, but we definitely keep it limited to a certain level because it all comes back to safety. You don't want a robot to run at an extremely high rate, which could have eventually caused some type of safety issue in a facility.

It is living with the employee, not overtaking him within the facilities. - The introduction of technology can reduce the amount of walking and heavy lifting that workers and warehouse workers must do, but it can also increase the pace and repetitiveness of their work. So, it is important how the technology is implemented in each warehouse. Management sets the pace for robots, and that determines the pace at which humans have to work to keep up. The UC Berkeley report found that the introduction of technology and the way it speeds up work can lead to more turnover and burnout.

Turnover at many of Amazon's warehouses has surpassed 100%, according to a Wall Street Journal analysis of federal labor data and data from Amazon's own site. - Well, I just finished a nice 12-hour shift. So I'm heading home from work, Amazon Warehouse MSP1 in Shakopee, Minnesota. One of the disadvantages of working until 6:00 a.m. m. is that the sun rises. At least when you want to go to sleep. I was a stevedore and then a collector for more than two and a half years. You're storing inventory, you're selecting things from inventory. When COVID hit, I became a learning trainer, so people are trained.

Hey, nice open place. Good day. Some of the things I train people on are how to access real robotics very safely and how to repair individual equipment. I have worked at Amazon for four years. When I started, my feet hurt and I got blisters. Blisters stink. After a long work week, you will literally feel hungover the next day. After so many hours of work, I now feel a kind of hangover from all the stress andtension exerted on the body. So you have to hydrate a lot, you need to sleep as much as you can. When I started working at Amazon, in the first month I lost 10 pounds.

So I had to eat before work, on the first break, on the second break, on the third break, and after work, just to maintain my current weight. You have to make different adjustments like that in your life to make sure you can survive physically. Well, I'm awake. At least today is my last shift, so I can bring you your email tomorrow. I love you grandma. One of the positives, the golden handcuffs, which a lot of people like, it keeps them there despite the negatives, which would be things like health insurance and time off, being flexible, that was also very helpful, and still it is. useful, like today.

So if you have family commitments or you're trying to go to school, like I help my grandma all the time, it's really helpful because you can use some of that free time to work with your Amazon schedule. Or you will mature in how you handle things so you can handle different situations more effectively. Otherwise, you will simply burn yourself. - These warehouses are located at strategic points on our nation's highway system, where land is cheap and widely available, so they tend to cluster together. So the workers there actually have a lot of leverage or more leverage than before because they can go anywhere that offers the highest salary. - Okay, then we'll have to palletize them again so they can all sit on... - (incomprehensible) - Yes.

Please. Working in a warehouse is very competitive nowadays, when you have different jobs that offer you $22 an hour to work for them. I started as a picker, then hand picker, packer and then moved into shipping. Because I always said I wanted to learn everything in the warehouse. That's my goal, to challenge myself. Some days it gets very stressful. You have your days, where it's a good day, you have your days, where you're just, "Okay, I'm going to go." They are different days for different things. - If you think about this in terms of how we live now, there has been a big shift between going to the store and buying your own things, and paying other people to do it for us.

So it's this fundamental transition between how we used to shop, how our consumer culture used to work, and now how we shop online. It's not a trivial change at all. And in the meantime, it's a creator of millions of jobs because someone has to do all that work for us. - If labor remains a challenge, we will continue to optimize it through automation and robotics to offset the labor problem. But the reality is that the cost of compliance will increase because the cost of labor will increase. - So, the last leg of our USB charger's journey leaves a logistics center.

It will then end up being loaded onto a truck at what is known as a delivery station, and that truck will be the one that takes it to its final destination; a business above your house. So one of the strange things about the new world we live in is that when we order things online, the last mile delivery driver may be our only point of human contact with this whole system. We might even know our local UPS driver or our local postal carrier because they tend to have very consistent routes. -Doreen likes things inside her because, especially if it's going to rain.

Other transporters sometimes don't leave it in the same place and she is like searching the property. That's why I try to be very consistent every day. I have been with UPS for 32 years, since 1989. I have been on this route for about 12 years and have been on it for 13 years now. It is good here. Come here. Come here, ready? I know, see? Everything is well now. - The main tension in last mile delivery is that we want a lot of it. Even before the pandemic, the challenge was how to hire enough workers to drive all those delivery vans. - If you could go back 10 years and imagine the packages you received at home, they used to be relatively high-value goods.

You may have legal paperwork, or electronic paperwork, or some high-value item that was sent to you and, most likely, you had to sign for it. E-commerce requires a much cheaper system. - So the people who actually do last mile deliveries, just like the warehouse workers, have to work to a very high standard. They have to work at a very fast pace. Typically, at a place like UPS, they are training these drivers to economize every action. There are people who have to operate like industrial athletes because they have to move very quickly and efficiently, and at the same time, of course, navigate the dangers of America's roads. - So today we talk about three things.

We talk about "keep your eyes moving," right? Two seconds ahead, five to eight seconds behind. We talk about counting one, two, three. Count one, two, three before putting your vehicle in motion after the vehicle in front of you begins to move. - So last mile delivery is extremely physically demanding because people have to get on and off a truck all day, they have to carry heavy packages and, like in warehousing, it's the repetitive motion that can damage the people's body. So of course you have to train people to do it safely. It's not just about lifting weights safely, it's about lifting weights safely two to 300 times a day. - There are more than 500 methods to deliver a package.

I mean everywhere from those three points of contact, that first step, scanning my area. I'm approaching the stop, I'm scanning that area. I'm signaling, "Okay, I'll park here." I put on the handbrake by pulling the mirror. I'm planning ahead. "Okay, I know I have five big packages for this stop." "I know they're in the back. 'Okay, then I'm going to stop at this place,' he pulled out the pushcart." Sometimes I don't even like to realize it, it's just... I've done it for so many years that it's... it's just... it's like automatic. I only know what I have to do.

And I know how to do it, and be efficient and safe at the same time. By working for UPS, I don't have to pay for my own vehicle or vehicle insurance. My health insurance is amazing. They pay me pretty well. They pay us almost 40 dollars an hour. And after eight hours, we get paid time and a half. I know the oops aren't going anywhere, so when I retire in six years, I'll be fine, and so will my family. - We can't do the kind of cheap, bulk freight transportation that Amazon aspires to, for example, with the types of services we had with UPS and FedEx. at the same price.

UPS drivers, for example, have a high-paying job and good benefits. So what is happening in the last mile is an attempt to create a much cheaper version of UPS or FedEx. - So the trend in last mile delivery has been toward contract drivers, and it's a way to not only limit liability, but also limit the extent to which a company has to be responsible for someone's working conditions. - Okay, so it's 1:34 p.m. and I have a block schedule from two to five in the afternoon. - There has been a fascinating story that developed in last mile delivery.

It's powered almost exclusively by Amazon, almost entirely. Similar to Uber and Lyft, which Amazon calls Amazon Flex, where people drive their own personal vehicles. - I make Amazon Flex deliveries. I also do a lot of side things, like sharing economy apps, like Uber, DoorDash, Instacart. Well, I actually started signing up for Amazon Flex during the first COVID lockdown. I don't think you can work at Amazon Flex full time because you usually only work about 30 hours. You are responsible for all your own expenses; Gasoline, wear, oil change and all that. It's basically like Uber but with packages. - You have arrived with destiny on your right. - Typically with Amazon Flex, it starts at $18 per hour for a three-hour block.

So for a three-hour block, you would get $54. At some point, blocks would increase to $23 per hour or sometimes $45 per hour during peak seasons. It can be lucrative if you're willing to be patient and take advantage of all the gains. Peak season is definitely here. So this block was three and a half hours for 157.50, family. That's the biggest three-and-a-half-hour block payout I've ever seen. That's like 45 per hour. I mainly get rural routes. From one delivery to the next it is approximately six miles. I have been putting a lot of miles on my car. As for physical work, many times it involves light envelopes and just driving a lot.

It is usually a different route every day. I think it's inefficient because you can't really know your route or your delivery area. - In order to meet its own demand for last-mile delivery, Amazon had to create a last-mile logistics network, like that of UPS or FedEx, but its consists of outsourced local delivery companies that actually own and operate the vans. the Amazon brand. - And so what they've taken is a relatively unique approach, which is kind of a franchise. And so, now they... You can buy 40 vans on Amazon, or lease them, as an entrepreneur, you can hire up to 100 drivers in what they call a DSP, delivery service partner.

And then Amazon does all the planning. So they put all the packages together, they label them, they plan the route and then their franchise drivers will take a van that they own with the Amazon logo on it and they will drive it to the fulfillment center, they will load it and then they will follow the instructions. route that Amazon provides on your phone. - I have been working with Amazon Flex for about two years. I also used to work with Amazon DSP for about 10 more months, driving the blue van was... I think it's a very physical job.

Sometimes you have like 200 stops and 300 packages in an eight or 10 hour shift. My highest number of stops in one day was 240 stops. It is what it is. Do your job to ensure you return home safely. You have to keep up with the Amazon expectations of 20 stops per hour. - So one of the effects of using subcontractors to make delivery is that when drivers are forced to make more and more stops per day, if that causes an accident, the parent company is protected from any legal liability. - And I think that will be the central question of the next decade for Amazon, if they continue with this model, what responsibility Amazon has towards those workers and what they do on the roads. - Amazon has already become the main carrier of its own packages.

Now it announces that it hopes to beat UPS and FedEx at their own game. - We hope that by the end of this year it will be one of the largest airlines in the world. I think we will probably be the largest package delivery carrier in the US - Amazon's delivery network is growing at a rapid pace. From 2019 to 2020, its share of US package volume grew from 13% to 21%, which, at this point, makes it larger than FedEx. - Last-mile delivery work, which until recently has been fairly high-quality work, is facing a similar type of decline as long-haul trucking experienced after deregulation.

Labor is therefore losing skills, workers are receiving lower and lower wages over time and this is leading to very high levels of attrition within major companies' subcontractors. We will need to hire hundreds of thousands of last-mile delivery drivers to meet e-commerce needs in the next decade, and we may have a shortage of such workers in the future. - When I worked for the delivery company Amazon, I didn't see any future or any career advancement, so I simply left it. I really like the work of Amazon Flex because it gives me a lot of freedom to choose. - I know there is a blind spot here, because this is my route and I have been doing it for 12 years.

So I know all the little hidden things I need to be aware of. - So the last leg of our journey is a human being taking a box and carrying it to the front door. And all of our involvement with the supply chain up to this point could have been as minimal as opening a website or app, clicking “buy now,” and that product arrives the next day. - When you think about ordering a USB charger online and receiving it at your doorstep, it is truly a remarkable achievement. It is not a very expensive device and comes very far from the factory.

What it depended on was cheap transportation, cheap labor, and efficiency all the way. We have really benefited from a very benign global business environment over the last 25 to 30 years. And what the pandemic has shown us is that maybe that's not necessarily a good assumption. What the pandemic really highlights for us is how vulnerable many of those links are to disruption. - Consumers are forced to adapt to the frustration of intermittent shortages, not being able to get what they want because one thing or another cannot make it through the supply chain. Beyond the scarcity, obviously, one of the biggestimpacts of problems in the supply chain is the increase in prices. - It is difficult to predict the persistence and effects of supply constraints, but it now appears that the factors pushing inflation up will persist well into next year. - Challenges in supply chains make it difficult to combat inflation with the usual tools, which are the adjustment of interest rates.

The most powerful financial institution in the world is telling us that interest rates are not necessarily enough to deal with all this inflation. As a result of these supply chain challenges, companies are reconsidering where things are made and how far they have to travel to get to us. - One of the questions that many people have asked, due to the pandemic, is about all this manufacturing that has been moved abroad, can we move it back inside? This was actually due to the labor cost differential, which was substantial. So, moving from a high-cost country to a low-cost country, economically, is quite simple.

Moving from a low-cost country and relocating to a high-cost country is a completely different matter. We will see some, but we should not underestimate the challenge. - It's a great day for the technology industry in Texas. Samsung officially announces it is bringing a $17 billion semiconductor factory to Taylor. - Companies like Samsung have pledged tens of billions of dollars to build microchip factories in the United States. Intel, specifically, has pledged $20 billion to build a facility in Ohio. - This is a huge victory for Ohio and it is truly a turning point, a turning point for our economic future. - Shows how big these supply chain problems are and how different the present is from any point in the immediate past. - I think what we saw during the pandemic was an inability to pivot quickly to meet changing demand patterns.

The question we need to ask ourselves is: "Is it likely to happen again?" (artillery bombardment) (tense music)