The tangled U.S. supply chain, which has left U.S. ports snarled with traffic and threatens the holiday season, is drawing federal attention, and experts warn the problem may not be solved this year.
President Joe Biden announced Wednesday what he called “game changer” plans to keep two of the nation’s busiest ports — the Port of Los Angeles and the Port of Long Beach — open 24 hours a day, seven days a week. The two California ports are the point of entry for 40 percent of the containers to the U.S. and have seen demand surge this year.
Separately, the White House said Walmart, FedEx and UPS are voluntarily moving toward 24/7 operations. Samsung, Home Depot and Target would ramp up off-peak work hours to alleviate the backlog of freight.
The announcements followed a White House meeting at which Vice President Kamala Harris met with shipping, retail and labor leaders to determine how best to alleviate a growing logjam in the nation’s supply chain.
In remarks after that meeting, Biden said that traditionally the ports have been open Monday through Friday and closed down at night and on weekends.
“By staying open seven days a week, during the night and on the weekend, the Port of Los Angeles will be open over 60 extra hours a week,” he said.
Retailers such as Walmart had already been taking steps to alleviate the backlog.
Joe Metzger, executive vice president for supply chain operations at Walmart U.S., said the company has chartered ships and diverted shipments through less congested ports, and is hiring 20,000 people to fill permanent supply chain positions. It has also rerouted inland shipments and hired more than 3,000 drivers to try to accommodate the demand, he said.
“We have been laser-focused on inventory levels since the start of the pandemic and reported higher inventory in the second quarter this year than a year ago,” he said in a statement on the supply chain. “While we’d like to see inventory levels continue to improve, we’re on the right track.”
Willy Shih, a professor of management practice at Harvard Business School, said the logistics logjam is primarily pandemic induced. Automakers cut back orders in 2020 only to realize when demand ramped back up that they had cut back too far. COVID-19 outbreaks have shut down work at ports, and a shortage of warehouse workers and truck drivers has contributed to the problem. Even while all that’s occurring, e-commerce is on the rise.
The demand to restock and catch up that began in August 2020 “has not ended,” Shih said. “There has been no lull. It’s been nonstop peak shipping since then.”
He said 73 ships were waiting last month to unload at the Port of Los Angeles. That bottleneck has spread to Vancouver, where “there’s so much traffic you can’t get trucks in to get containers,” he said. New York, New Jersey, Savannah, Ga., and Seattle are also facing logjams.
“People are trying to go wherever they can to get the cargo in,” he said.
The White House says the supply chain isn’t any less of a problem overseas. The Chinese ports of Shenzhen and Ningbo-Zhoushan — two of the five largest ports in the world — each experienced partial terminal closures for several weeks aimed at curbing COVID-19 outbreaks, which snagged global supply chains. And in Vietnam, lockdown restrictions in September halted production supporting thousands of retailers worldwide.
Shih said the problem has contributed to higher shipping costs, which are passed on to consumers. Two years ago, he said, it cost $1,800 to move a container from Shenzhen to Los Angeles or Long Beach, and $4,000 by the time that product moved inland.
“These days, it’s over $20,000,” he said. “And when you’re doing charter, it costs twice that. And somebody’s got to pay for it.”
He warned that the expanded hours would not solve the problem. The problems aren’t just in ports; they’re all along the supply chain, and with a trucker shortage, “the bottleneck will then shift elsewhere, like to the distribution centers and intermodal hubs,” he said in an email.
Republicans have seized on the issue as an indictment of Biden’s policies, blaming bottlenecks for the oil spill off the coast of California.
Were it not for the growing number of container ships offshore, they say, there would have been no oil spill. Coast Guard investigators have determined an anchor likely struck the pipeline, which may have contributed to the crack that caused the leak.
Rep. Sam Graves of Missouri, the ranking Republican on the House Transportation and Infrastructure Committee, said Wednesday that Biden’s policies on COVID-19 response and his large spending bills “are exacerbating or ignoring the underlying supply chain issues.” He blames those policies for the backlog and for inflation.
Other Republicans have called the congestion problems “Biden’s bottleneck.”
For his part, Shih suggested pandemic relief spending has contributed by spurring Americans to buy consumer goods and adding to the supply chain woes.
“If you talk to shipping executives, they’ll say their only relief will be when American consumers stop spending like they’re spending,” he said. “We have dumped so much money into the economy that what has happened is an import boom like nobody’s ever seen.”