There are growing fears among retailers that Washington’s efforts right now will do little to save the important Christmas shopping season.
“There is no political intervention that can do this, and there may not be human intervention that can do it because this problem will now last well into next year,” said Steve Pasierb, the president and chief executive officer of the Toy Association.
To date, the Biden government has shifted much of the responsibility to the private sector to fix the growls, despite calls from some industry groups for more federal funding. Senior officials say the government has limited oversight over ports and shipping companies. Instead, it has used its weight to convene actors across the supply chain and put pressure on them to extend their operating hours.
“The supply chain is largely in the hands of the private sector, so we need to step up the private sector to help resolve these issues,” a senior official told reporters on Tuesday.
On Wednesday, the White House will announce that the Port of Los Angeles will remain open around the clock on a schedule the Port of Long Beach adopted three weeks ago. Together, these California ports have the worst backlog in the country, according to the Marine Exchange of Southern California, with 80 ships waiting to dock on Tuesday evening.
FedEx, UPS, Walmart, Samsung, Target and Home Depot will also start sending drivers to ports during night shifts and for longer hours to move more containers every week. The unions participating in the White House meeting will commit to providing the necessary workforce.
Administrators admit that these steps alone will not clear the backlog that has only grown in recent months. They hope Wednesday’s announcements will spur additional retailers, long-distance haulage companies and rail operators to act until the entire supply chain works without a break.
“With these steps you are telling the rest of the supply chain, ‘You have to move too. Let’s reinforce it, ‘”said the officer.
Industry groups want the administration itself to be strengthened. Some have suggested moving shipping containers temporarily from the docks to the state or state so ships can unload faster, while others have called for military and defense resources to be deployed.
The challenges that weigh on global supply chains are months, if not years, in the making. The pandemic led to an incredible surge in demand for consumer goods. In addition, factories and ports in Asia have been temporarily closed due to Covid-19 outbreaks. extreme weather and electricity Failures in Chinaall of which contribute to shipping delays, product bottlenecks and higher costs.
It’s not that less cargo is moving. In fact, ports are processing record levels of imports and shipping container costs have soared to unprecedented levels in recent months due to demand. The supply chain simply cannot keep up with the increased demand for goods – and industry players expect the burden to continue.
In August, the government hired John Porcari, a former deputy minister of transport, for a six-month post to relieve congestion in ports – a major bottleneck in the supply chain. Porcari’s job is to “hit the heads and clean up the immediate residue,” as Peter Harrell, Senior Director of International Economics and Competitiveness at the White House put it.
But Porcari’s main tool was to convene meetings with companies at different stages of the shipping process, encouraging them to extend their working hours and share information about obstacles.
These calls are common. Gene Seroka, executive director of the Port of Los Angeles, calls administrative officials several times a day, said he said to provide status updates on the port’s operations and coordinate new White House initiatives with others in the supply chain.
“Everything we’ve done is incremental,” Seroka said, but these small changes produce results such as:
Porcari works as part of the Supply Chain Disruptions Task Force that Biden set up in June. This group has been looking for short term solutions to ease the burden. But the start date in summer left little time to get the busy season for holiday programs off to a good start in September.
Meanwhile, major retailers like Costco, Walmart, Amazon, and Home Depot are chasing their own workarounds. Seroka said some companies placed early holiday orders in anticipation of delays and dispatched regional delivery drivers to move cargo away from ports. Others have chartered ships to carry their own shipping containers or rerouted their shipments to ports outside of California to reduce delays.
“The larger companies have more leverage and flexibility to do more within their supply chain than smaller companies, so you’re sure to see a lot of implications for companies across the board,” said Jonathan Gold, vice president of supply for the National Retail Federation chain and customs policy.
Independent analysts predict that the crisis will last well into the future and that the administration will be forced to work on long-term solutions as well.
“We may not be able to find short-term solutions right now, but it is crucial to focus on them now so we don’t run into these problems in the future,” said Gold.
The Biden government has highlighted the bipartisan infrastructure package, which includes more than $ 200 billion in new spending on transportation for ports, airports, railways, roads and bridges.
The package has widespread support from industry groups who say US systems have fallen behind competing economies. China, for example, has invested incredible sums in its own infrastructure over the past few decades and continues to do so. But even if the bill gets House approval and lands on Biden’s desk before the end of the year, it won’t help companies weather the current crisis.
“It’s like planting an orchard today to satisfy hunger,” says Steve Lamar, CEO of the American Apparel & Footwear Association, whose members rely heavily on supplies from Asia.
Biden also signed an executive order in July aimed at consolidation in the shipping container industry, which he believes has hurt American exporters. It has directed the Federal Maritime Commission, an independent federal agency that regulates maritime transportation, to prevent shippers from charging excessive fees. The decision also called on the Commission to work with the antitrust authorities to investigate competition concerns.
Dan Maffei, chairman of the Federal Maritime Commission, admits that investigations into inflated fees and market consolidation are not a solution to the vacation crisis. Maffei said he understands parents’ plight as a father of a 7-year-old child, but expects they can find alternatives even if stores sell out the hottest toys.
“The bottom line is that there are challenges – because of the demand, because of the systemic problems – that affect the supply chain,” Maffei said. “You won’t cancel Christmas, but you might make sure that you don’t get exactly the toys you want for your children.”