WASHINGTON (Businesshala) – President Joe Biden is pushing for Christmas to ease supply shortages and ease rising prices, but it could take longer to unwind US supply lines, experts told Businesshala.
Biden on Wednesday brought together powerbrokers from ports, unions and big businesses to address the shipping, labor and warehousing pain in the US supply chain, and announced new round-the-clock port operations in Los Angeles.
As his Republican opposition seizes the potential lack of Christmas to link Biden’s economic policies to inflation, and tries to stall a multitrillion-dollar spending bill in Congress in the coming weeks, the White House The message was on Wednesday that a solution is in sight.
“It’s a complete commitment to go 24/7,” said Biden, a Democrat. Opening up the port, and promises from retailers like Target and Walmart to carry more goods overnight, is a “big first step.” Now, he said, “we also need the rest of the private sector chain to move forward.”
While greater collaboration between the often competing, secretive players in the US supply chain business is a plus, the White House’s influence may be at best, logistics experts, economists and labor unions have warned.
“What the President is doing is really not going to hurt. But at the end of the day, it doesn’t solve the problem,” said Steven Ricciutto, US chief economist at Mizuho Securities.
Americans, already the world’s biggest consumers, have been buying a lot of goods during the pandemic, much of it imported. Couple that with a lack of labor, a lack of equipment, and a lack of space to store that stuff, across the country.
Players from ports to retail chains are already doing their best to handle the pandemic-fueled surge in imports and with the Black Friday kickoff of November 26 on shelves and e-commerce centers in time for the 2021 holiday season Receiving holiday gifts.
Imports at the Port of Los Angeles – the No. 1 gateway for maritime trade with China – are up 30% so far this year compared to last year’s record.
But, due to lack of chassis and delayed pickup due to paucity of space in rail yards and warehouses, around 250,000 containers of goods have been stuck at the docks. And it’s backing up dozens of ships at anchor outside the port.
“The analogy would be the boa constrictor that ate the mouse. There is a lump in it and the lump is a bottleneck in the throughput of the supply chain, and it goes up every time you plow for a bottleneck,” said Supply Chain at CBRE Group Joe Dunlop, global head of the advisory team, a commercial real estate services firm.
‘You don’t build a church for Christmas’
Frank Ponce de Leon, International Longshore and Warehouse Union Coast Committeeman, summarized the problem at US ports during comments last week, which the Commerce Department estimates handles 76% of all trade.
“You don’t build the church for Christmas and Easter; you build it for the regular Sunday service,” he said. “With the unprecedented influx of cargo, it’s like Christmas and Easter at the docks every single day, and more The ships are coming and the pews are full for months, and there’s nowhere left to sit or stand.”
Longshore Union said dockworkers are available in 24-hour shifts to help clear the port backlog. But this is not true for those who move goods to and from ships or ports, other unions say.
“A major problem with the current state of logistics is the paucity of port truck drivers. They are not paid a living wage,” said Teamsters general president Jim Hoffa, who attended the meeting with Biden.
Backups can exacerbate that shortfall, as many port drivers are not paid for the hours they wait to pick up a container, making the job less lucrative.
Still, there’s no evidence that veteran workers are sitting on the sidelines — American transportation and warehousing are now employing more people than they did before the pandemic began, data from the Bureau of Labor Statistics shows.
Graphic: Recruitment of transport is back to pre-pandemic levels,
Warehouse Overfull, Short Staff
Like ports, warehouses work best when they are moving products in and out quickly and predictably. Instead, port officials say, they are full of roofs and struggling with hiring and retention of staff.
American companies are leasing warehouse space at record levels to handle the large influx of goods for e-commerce.
Markets serving Southern California ports include the Los Angeles and Inland Empire regions, which had vacancy rates of 1.2% and 1.4%, respectively, in the second quarter, according to CBRE data.
“Space is clearly tight,” Dunlop said.
It’s not that warehouses are at capacity, International Warehouse Logistics Association CEO Steve DeHaan said recently in a letter to the White House Supply Chain Disruption Task Force’s port envoy John Porcari.
Warehouse owners, tenants and workforce employers can be separate companies, which makes it difficult to draw up new contracts to pay those who work round-the-clock. “The warehouse can’t make this decision arbitrarily,” DeHaan said.
He added that moving a warehouse into 24/7 operation adds another layer of risk.
“For example, receiving a container at 6 a.m. that was scheduled for delivery at 3 a.m. disrupts operations for the entire day,” DeHaan said. “The target of reducing container congestion in the next 90 days is ambitious.”