Message in a Bottleneck: Supply Chain Disruptions and Manufacturing Output in the United States

Abstract

We examine the effect of container shipping disruptions on US manufacturing output before and during the Covid-19 pandemic. We augment maritime trade with a global production network model, where the reliability of container logistics is critical for the on-time and full availability of inputs and the delivery of output to foreign markets. We combine a US container shipping reliability dataset with input–output and trade data to construct a novel supply chain disruption index that captures the integration of upstream and downstream linkages of the US manufacturing sector into the global supply chain. Our findings suggest that a one-unit shock leads to a very similar response on output through the upstream (import) and downstream (export) channels. Industries adjust their inventory strategy to cope with supply chain disruptions. Container disruptions affect non-durable industries through the downstream and durable industries through the upstream linkages. Our study highlights the importance of understanding the drivers of a resilient global supply chain.