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Experts: Supply chain crisis shows signs of easing as industries work to keep up with holiday demand

Businesses said they're prepared for holiday shoppers despite high demand and other challenges that continue to plague retailers.

KNOXVILLE, Tenn. — Supply chain issues continue to complicate the holiday shopping season. Items in short supply range from necessary microchips, to food items and ammunition. 

Experts aid there are a few signs the supply chain challenges are finally starting to ease up, though.

Lance Saunders, an associate professor of supply chain management at the University of Tennessee's Haslam College of Business, said supply and demand should finally start to balance out in the coming months.

In other words, you might want to put cash on your Christmas list, because Saunders said once supply goes back up to exceed demand, prices could start to fall.

"A lot of the things that we were worried about happening -- you know we would go in and we weren't able to buy what we wanted for Christmas -- a lot of these will be averted," Saunders said.

Now retailers like Walmart are reporting they are using their own ships to bring in goods from overseas. Target and Costco did the same to make sure shelves are stocked for the holidays.

"What I am hearing is that they're actually prepared for the holiday season, so I'm cautiously optimistic," Saunders said.

These major companies said they're ready for the holiday shoppers, but that doesn't mean the prices are likely to budge in time to check off your Christmas list.

"I would definitely recommend to be patient when this happens," he said.

Since the start of the pandemic, people's spending habits have changed quite a bit.

"You see some of that disposable income going more to services and travel and things like that. Well what does that do? It lowers the demand for goods," he said, which is the goal.

Saunders said patience is going to be a virtue for people looking to nab deals on some goods that are currently in short supply.

"Next year will probably be a lot of deals, would be my guess, because these shortages now tend to turn, because of the bullwhip effect turns into gluts of supply later on," he said.

What that means: because businesses have been ramping up production to meet unusually high demand through the pandemic -- when that demand finally drops and the supply chain starts to even out, they will eventually be left with an excess of supply that needs to be moved. That will temporarily drop prices on those goods as businesses work to get rid of the extra inventory while they try to dial down production.

Local businesses may have a tougher time this season. Owner of Bike Zoo in Knoxville Steve Bacon said shipping costs for his shop have been extreme.

"I've done this for 30 years and I've never seen anything like this," Bacon said.

For many local businesses, renting their own means for transport isn't an option. 

When it comes to bikes: "You don't have one manufacturer making all of those parts. If one of them can't supply the parts, then you're not getting the bike," Bacon said.

Fortunately for Bacon, demand for bikes spiked throughout the pandemic and they have been able to keep the shelves stocked. The only problem is knowing when specific items are coming in. He said they sometimes wait months for certain bike parts to come in. 

"We've been really fortunate. Not all shops have been experiencing that," Bacon said. 

Saunders said one thing that should help local businesses stay on their feet is oil, which looks like we're about to have more of in the short-term. The White House announced Tuesday it is tapping into 50 million barrels from the Strategic Petroleum Reserve to help ease gas prices soon.

This comes as gas prices are up more than 50% from 2020 to levels not seen in roughly seven years, according to AAA. Much of this is due to a global energy crunch amid renewed demand as the pandemic's impact on travel eases across the world.

Saunders said the White House's move will do more than just lower prices at the pump in the U.S.

"A lot of the packaging you're talking about is dependent on the price of oil and just oil being available to produce, so hopefully actually some of the shortages that we've been discussing - that will actually help some of those over the next months as the supply to make those is more available," he said. 

The White House said it is also directing the Federal Trade Commission to investigate American energy companies for potential anti-consumer practices amid soaring energy prices. 

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