Thousands of containers piled up over weeks in ports are the palpable image of the bottlenecks in supply chains that threaten to slow the rampant economic recovery in the United States after the pandemic. The closure of factories due to the health emergency, blocked sea routes and labor shortages have combined in a perfect storm, to which the deficit of key elements such as semiconductors, which interrupts production in key sectors, is not unrelated. like automotive. But it’s not just microchips that are in short supply: diapers or the foil needed for individual seals for many drugs are also in short supply.
For all this, and because the short circuit is already more than evident to the consumer, the US president, Joe Biden, announced this Wednesday a battery of shock measures, including the uninterrupted operation, 24 hours a day, of the port of Los Angeles California). Some of the main companies in the country, such as the large distributors UPS, FedEx and Walmart, have also committed to extend their hours to 24 hours a day, seven a week to reduce the accumulated delay in the distribution of goods and merchandise and thus save another pothole, that of rush hours. Three other major chains may join shortly.
In recent months, large-scale corporations such as Costco, Home Depot, and Walmart have gone to the extreme of chartering their own ships to move cargo from the Pacific Ocean to the US. The accumulated delay in unloading and distributing merchandise is 11 days. on average, although some ports register a greater collapse.
Slow freight rates accelerate inflation risk
As the International Monetary Fund (IMF) has underlined in its global forecasts, presented this Tuesday in Washington, the shortage of some products causes an increase in prices that feeds the risk of inflation. In September, the consumer price index continued its upward trend in the US, with a rate of 5.4% (5.3% in August). The data puts the White House and the Federal Reserve in trouble, facing a longer inflationary period than initially expected. Hence the measure of decongest The main ports of the country by piece rate, so that the merchandise and the famine caused by the shortage of food, electrical appliances and automobiles, among other sectors, can be serene. The steering wheel orchestrated by the White House comes on the eve of the busiest shopping season of the year, between the Thanksgiving and Christmas holidays.
Biden is scheduled to speak out on Wednesday on the pressing problems that entangle the activity of ports, factories and shipping routes, which have led to paralysis in some cases, as evidenced by the thousands of containers accumulated for several weeks in the important port of Savannah (Georgia) and New York. The continued operation of the Port of Los Angeles will be added to the Long Beach annex, which already operates on a piece-rate basis. The federal government has also urged the states to grant more licenses for carriers, another sector with a deficit.
The problem comes from afar, as an automatic response to the consumer expansion brought about by the economic recovery, on track since last spring. In June, Biden created a special task force with the sole objective of ensuring the fluidity of supply chains. Surrounded by the members of that strike force, the Democratic president met this Wednesday at the White House with those responsible for the two aforementioned ports and the two majority unions in the sector, after holding a videoconference with the directors of the large distribution chains.
The economy, the first concern of Americans
The disruption of supplies is not only creating problems for the consumer, it also has a political consequence that manifests itself in a declining approval rating for the Democratic president. “My Administration works 24 hours a day to move more goods, faster and strengthen the resilience of our supply chains,” he tweeted on Wednesday. The latest Ipsos poll for Reuters shows that the economy continues to be the issue that most worries Americans, both Republicans and Democrats.
Experts have expressed their doubts about the determined intervention of the White House, since the interruptions reach until the last link of the chain. The expected deadline to return to a pre-pandemic normalcy is extended until the end of next year, according to most analysts, or perhaps until 2023. In a conference call with journalists, senior White House officials admitted on Tuesday the paradox that Biden’s $ 1.9 trillion pandemic bailout plan, which was approved in March by Congress, may have influenced unleashed consumer demand and thus the supply gap. Imports for the last quarter of the year are 4.7% above those registered in the same period of 2020.