Supply chain problems have been blamed for shortages in recent months.
Could the empty store shelves that we saw at the start of the pandemic be returning? Prompting government intervention, supply chain problems have been blamed for creating shortages in a number of markets, ranging from diapers to candy and other foods over the last few months.
As Dr. Anthony Fauci encourages kids to go trick-or-treating this year, the snack company Mondelez revealed in a company email that it had “limited availability” on some popular Halloween candy favorites like Sour Patch Kids and Swedish fish candy. What’s more, is the company doesn’t expect these items to be available until next year. Other holidays are also feeling the pinch: Artificial Christmas tree prices have already jumped 25 percent because of supply chain problems.
“It’s affecting everybody across the board,” says Jonathan Gold, who is vice president of Supply Chain & Customs Policy at the National Retail Federation. “I don’t think anyone has been spared, they’ve seen some kind of supply chain disruption or delays in getting their merchandise.”
In response, Gold says retailers have been taking their own mitigation steps, such as shipping containers by air or looking to alternative ports to send cargo. Some have even taken to charting their own vessels. Despite these efforts, there’s no guarantee that holiday packages will arrive on time. That’s why Gold is recommending that people get started on their shopping as soon as possible.
“Retailers are working now to have the holiday merchandise available — be patient understand the challenge that many are facing,” he tells us.
But these supply chain issues go far beyond the busy holiday shopping season: they’re already having a major impact on manufacturing. In fact, the lack of computer chips is forcing automakers to cut back on production and preventing them from meeting increasing demand. “It’s really affecting supply chains throughout our economy and very consequential ways,” says Robert Scott, who’s a senior economist at the Economic Trade Institute.
So what’s exactly to blame for this crisis? The supply chain, which has already been stretched thin by the pandemic, is facing unprecedented demand, and Scott estimates that the U.S. has imported nearly $3 trillion worth of goods in 2021 alone.
“What’s happened over the pandemic is that there’s been a tremendous surge in imports — far in excess of anything we were consuming before the pandemic hit,” explains Scott.
This has, in turn, led to some serious backlogs and nearly half a million shipping containers were left to drift off the Southern California coast last week. But this is nothing new: ports in Los Angeles and Long Beach, California hit multiple records late last month, as over 60 cargo ships floated off the coast waiting for unloading spots to open up. Together, both of these ports handle around 40% of all cargo entering the U.S. And they’re not the only ones hitting a tipping point: the Port of Savannah alone has nearly 80,000 containers stacked up at its docks, according to The New York Times.
Then there’s just the sheer amount of time it takes to send a package from Asia to the U.S. In fact, transit times on average are taking an average of 80 days, which is twice as long as before the pandemic. It’s also not any cheaper, costing roughly $12,000 to ship a 40-foot container of goods from Shanghai to Los Angeles. This amount is triple what it costed at the beginning of the year.
Even when cargo does make it to a port, there’s a chance it may sit there for weeks at a time before it reaches its next destination. But trucking companies maintain that this has nothing to do with the ongoing trucker shortage that has long plagued the industry, but rather the sheer inability to handle this kind of volume.
“I can’t really hammer home enough how hard everyone in the supply chain has been working and I just don’t think there’s enough praise that’s spread around to everybody from drivers to Harbor pilots to longshore port staff,” says Matt Schrap, who is CEO of Harbor Trucking Association. “Everybody is just really working to try to clear this backlog — it’s just the ships keep coming.”
Still, Schrap believes there’s room for improvement. He says there are a number of inefficiencies that are compounding the issue, including a shortage of chassis, which are a specially designed trailer or wheeled carrier used to transport containers from trucks between terminals, warehouses, and ports. But even if containers are successfully emptied, truckers often struggle to return them at the main ports in Los Angeles and Long Beach, creating a massive buildup. “You have six different appointment systems across the two ports for 12 different container terminals, and so you’re utilizing these different appointments systems that are not in a centralized location,” he says. That’s why he’s advocating for ports to create a more centralized appointment system for truckers to better coordinate the return of these empty containers.
As the supply chain issues come to a head, President Biden announced that three of the largest U.S. goods carriers —Walmart, FedEx, and UPS — along with the Port of Los Angeles will move towards working 24/7, seven days a week to help combat the congestion. Target, Home Depot, the Port of Long Beach among others have already committed to ramping up their hours.
“This is a big first step in speeding up the movement of materials and goods through our supply chain but now we need the rest of the private sector chain to step up as well,” Biden said during a White House address on Wednesday.
But experts estimate that these issues could linger until 2023 or even longer. Scott sees no end in sight if the U.S. government doesn’t address some of the underlying supply chain problems, such as a lack of infrastructure and increased dependence on foreign imports from countries like China.
“I expect that there will be continued and perhaps increased shortages unless we make massive investments in infrastructure to accommodate all these imports or we do something to reduce our reliance on imported goods and services,” he says.