Business

U.S. Ports Open 24/7 to Tackle Global Supply Chain Crisis


TL;DR (3-minute read)

  • There have been multiple delays in West Coast supply chains that deliver essential goods to the United States.
  • The White House is taking steps to ease these delays by opening the Ports of Los Angeles and Long Beach full-time which means almost doubling their hours of operation.
  • The reasons for the global supply chain crisis include global and domestic factors such as outdated domestic freight and rail systems, factory shutdowns, and the COVID-19 pandemic.

On Wednesday, President Biden announced that the Ports of Los Angeles and Long Beach will almost double their hours of operation and will now operate around the clock to ease West Coast delays in the global supply chains that deliver essential goods to the United States. Together, the ports of Los Angeles and Long Beach account for almost 40% of shipping containers that enter the United States. Product shortages have been frustrating for many American consumers and businesses, disrupting shipments of necessities like medications and holiday purchases, and have even contributed to the growing issue of inflation.

The Labor Department announced that the Consumer Price Index, a key indicator of monthly inflation, rose by 5.4% compared to the previous year. The White House states that plans are in place to increase the capacity of major California ports and major companies including Walmart, FedEx, and UPS. “This is the first key step to moving our entire freight transportation and logistical supply chain nationwide to a 24/7 system,” Biden said. Another key collaborator in the plan is the International Longshore and Warehouse Union. The ILWU has said that their workers were willing to work these extended hours and also urged the passage of an infrastructure bill that would make significant investments in ports, roads, and factories for the future. 

A view of the cargo ships anchored near the ports of Los Angeles and Long Beach as they wait to offload. (CNBC News)

Experts say the massive bottleneck at the California port complex is a combination of both global and domestic factors. It is reported that the sudden surge in cargo shipping is due to a pandemic-related demand for durable goods in the United States. Worldwide, factors such as An outdated domestic freight and rail system, factory shutdowns in places like China and Vietnam, and a shortage of skilled longshoremen on the West Coast are all reasons behind the current crisis. “Ordinary people and businesses are feeling the effects of these delays and bottlenecks. It makes it challenging to get products on the shelves, and for goods to be delivered to the doorstep,” the administration official said. To add on, the COVID-19 pandemic has shut down companies and slowed down production around the world. Port closures, shortages of shipping containers and truck drivers, and pileups in rail and shipyards have led to longer transit times and unreliable deliveries for a wide range of products, problems that have only worsened as the holiday season approaches.

Although efforts are being made to resolve the situation, it is unclear whether efforts by the White House can realistically help. Ultimately, the supply chain is in the hands of the private sector and there is little the federal government can do to compel private companies to move goods more quickly or efficiently. “Unfortunately, it does look like things are likely to get worse before they get better…but to some extent, they need to let markets do their work,” says Jennifer McKeown, the head of the Global Economics Service at Capital Economics.

Containers are piling up at the Port of Los Angeles and a record number of cargo ships are stuck waiting off of the Southern California coast. (NPR News)

Sources

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