Did it take longer than usual for some Halloween decorations to arrive at your house? Or now that the weather is getting cold, that throw blanket that should have been here two weeks ago is nowhere to be found? If it feels like packages are taking longer to get here and Prime delivery is not fulfilling its promise, then those are the consequences of the Great Supply Chain Disruption.
Accounting for almost half of the imports in the United States, Southern California ports have been backed up for the past few months. Because of policy around COVID-19 last year, these docks have never fully recovered (cutting back on jobs, quarantining, etc.) and it has only gotten worsen. September through December is peak customer order season because of Christmas, and these docks are already strained.
The New York Post claims that 32 percent more cargo has been processed this year than in 2020. Lots of that cargo has been sitting on boats waiting miles off the docks because docks are at capacity or lack the ability to offload and transfer to ready transportation modes. The Russell Group, a risk modeling company, estimated that over 90 billion dollars worth of trade may be disrupted if this backlog continued into late October. Now approaching the middle of November, persistent backlogs and minimal progress may add further losses and contributed to price inflation.
It is not just in California that the ports are getting overwhelmed. The Port of Savannah, the third-largest container port in the United States, is also feeling the pressure of supply chain problems. It is not the fact that factories and businesses are running out of goods, it is that inputs and goods are in the wrong places at the wrong times. This makes it difficult for them to come together if parts are not where they need to be.
The congestion is not just caused by the obvious problems of the pandemic. The world is so connected now that something that happens two continents over has rippling effects in the United States. Although domestic policy can greatly diminish issues or augment booms. The New York Times reported that COVID-19 outbreaks in Vietnam shut down the apparel industry for a while. Terminal shutdowns in China have also added to the delays. Businesses cannot get the materials they need to make their goods. Parts that may have only needed two weeks to arrive now might need two months – and even that is being optimistic.
Because people have been stuck inside so long, those that normally would not shop online have no choice. Seemingly more people are ordering online, but this does not necessarily translate to more cargo being made and transported, clogging up the ports. Consumer booms of the past have not led to similar issues. Kip Louttit, the executive director of the Marine Exchange of Southern California, however, is worried about excessive consumerism. “People are buying more now than ever because they’re at home, so things are bound to pile up.” This intuitive reaction nevertheless fails to account for all factors, including inefficient port activity and government policy here and abroad.
The Washington Post suggests that lack of leadership also leads to the backlog and the breakdown of the supply chain with key players failing to collaborate (docks to railroads, to trucks, to warehouses). Workers are scarce because no one wants to be waiting around for weeks on end. Truck drivers wait in hours-long lines to pick up cargo, then must drive for even longer. It does not help that if workers get sick or are exposed to COVID-19, they must quarantine. The quarantining and recovery period lead to labor shortages and the docks get even more stressed.
To help with the backup, the Port of Savannah is getting a $600 million expansion for more berths, railroad tracks, and storage yards. However, all of that is just a temporary solution as more and more ships pile in. Continuous, 24-hour port operations, like in Florida ports and automation and innovative technology like in Virginia ports can go a long way to reducing or preventing similar crises in the future. With the Christmas season looming ever closer, it will be a race against time to figure out what to do about the Great Supply Chain Disruption, for both industry actors and public officials.
By Emma Smith, Communications Intern
The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.