As Christmas approaches, businesses especially small to midsized
businesses are getting concerned due to the global supply chain issue since most
of them do not have huge warehouses to store goods. As retailers rushed to
restock their inventories from Asia, the shipping system struggled to keep up. As
a response, the Port of Los Angeles in California, one of the largest ports in the
United States, will start operating 24 hours a day to handle more goods at
night after a similar move by the nearby Long Beach port.
So how did this happen? The Covid-19 pandemic is definitely at the bottom of the problem. As the center of manufacture, China exports around $2000 billion every year. The shutdowns of factories and ports in China led to shortages of children's toys, timber, new clothes, and pet food in the U.S. and elsewhere, while also pushing up consumer prices. What made the situation worse is that the shortage of labor in the U.S. resulted in the lack of lorry drivers and port staff to unload and deliver the goods when ships reach the ports. Therefore, containers are getting stacked up and ships are getting congested in ports. For example, on one day in September, a record 73 ships were forced to queue outside for a berth in the Los Angeles port. It had to move 30% more shipping containers than usual in August, while Long Beach moved an extra 23%. The shortage of drivers also means that there is a delay in returning empty containers for re-use, which further exacerbates the situation because it not only drives up the shipping fees that businesses have to pay but also causes a longer-than-usual delivery period of the goods.
Besides major ports picking up night shifts to reduce their empty container stocks with the help from Walmart, UPS, FedEx, Samsung, The Home Depot, and Target, the White House has been making attempts to tackle the supply chain problem in general. Early this year, a Supply Chains Task Force was established and a Port Envoy was appointed to find remedies for the disruption. Not to mention the effort that the Biden administration put into passing the $1tn (£730bn) infrastructure bill which includes investments in improving the logistics of ports in the United States.
Credit: https://www.bbc.com/news/business-58901777
https://www.bbc.com/news/business-58895246
So how did this happen? The Covid-19 pandemic is definitely at the bottom of the problem. As the center of manufacture, China exports around $2000 billion every year. The shutdowns of factories and ports in China led to shortages of children's toys, timber, new clothes, and pet food in the U.S. and elsewhere, while also pushing up consumer prices. What made the situation worse is that the shortage of labor in the U.S. resulted in the lack of lorry drivers and port staff to unload and deliver the goods when ships reach the ports. Therefore, containers are getting stacked up and ships are getting congested in ports. For example, on one day in September, a record 73 ships were forced to queue outside for a berth in the Los Angeles port. It had to move 30% more shipping containers than usual in August, while Long Beach moved an extra 23%. The shortage of drivers also means that there is a delay in returning empty containers for re-use, which further exacerbates the situation because it not only drives up the shipping fees that businesses have to pay but also causes a longer-than-usual delivery period of the goods.
Besides major ports picking up night shifts to reduce their empty container stocks with the help from Walmart, UPS, FedEx, Samsung, The Home Depot, and Target, the White House has been making attempts to tackle the supply chain problem in general. Early this year, a Supply Chains Task Force was established and a Port Envoy was appointed to find remedies for the disruption. Not to mention the effort that the Biden administration put into passing the $1tn (£730bn) infrastructure bill which includes investments in improving the logistics of ports in the United States.
Credit: https://www.bbc.com/news/business-58901777
https://www.bbc.com/news/business-58895246
2 comments:
The covid pandemic has hit supply and demand chains all across the globe. I am not surprised to there be a hit in the shipping infrastructure, especially with countries in Asia. Many countries in Asia have taken industrial hits recently limiting the amount of factory output. This has had a huge effect on international trade, especially with retail stores in America. This could become a big problem as there could be shortages in an already almost deserted retail market around the holiday season.
This is definitely going to be an interesting holiday season. Products are going to be flying off the shelf and I am not sure the supply chain is going to be able to keep up when it comes to restocking the shelves. Clearly, this is not the result of just one area. You have power shortages in China reducing production, port jam ups, and a lack of truck drivers to deliver the products. My best advice would be to prepare and Christmas shop early because if you wait to the last minute you might be out of luck.
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