President Biden announced this week that the Port of Los Angeles will operate 24/7 to address product shortages in the United States. The news came alongside the Department of Labor’s release of data showing that the current supply chain crisis is pushing up consumer prices and inflation.
Conservatives are turning these developments into a tale of how this supply chain disaster is ruining Christmas – and it’s all Biden’s fault.
Despite what some people are saying on right-wing and social media, recent global supply chain issues cannot be blamed on Biden alone. As his recent efforts have shown, the president is trying to help. In reality, these shortages and delays are the product of many cross-cutting issues that have been around for years, including the Covid-19 pandemic, growing consumer demand, and a global and highly optimized manufacturing network that is not adapting to changes. fast.
As handy as it is to blame one person for America’s supply chain problems, the situation and its solutions are far too complex for such a simple explanation. Let’s discuss.
The supply chain is therefore complex. What does it mean?
The supply chain is how the global economy produces and delivers the products that people buy. It encompasses all the people, companies and countries that play a role in this process. Technicians at Taiwanese facilities that make computer chips are part of the supply chain, as are truck drivers who deliver goods from warehouses to retailers in the United States.
The factories that make the plastic used in packaging, the freighters that transport products from Asia to the West Coast, and even Amazon’s jet fleet are all seen as part of this incredibly complicated global manufacturing system that has been significantly disrupted over the past two years.
How has the supply chain been so disrupted?
It’s tempting to blame the pandemic on its own for the current supply chain catastrophe, but in some ways the pandemic has only exacerbated existing problems with global trade and exposed new ones.
The pandemic has caused factories to close, usually because there were not enough workers, which created shortages of products and components. These shortages have resulted in bottlenecks and delays in the manufacture of products (if factories don’t have the parts to build something, it isn’t manufactured and doesn’t ship).
As more shortages lead to more bottlenecks, the disruption causes problems in other parts of the supply chain, creating even more shortages, further delays and higher prices. For example, automakers haven’t been able to make cars and trucks because they can’t get their hands on enough computer chips. Ikea cannot ship furniture parts from its warehouses to its stores due to the shortage of truckers. A shortage of supply for petrochemicals has driven up the cost of manufacturing anything that includes plastic, including children’s toys.
Who broke the supply chain?
Again, no one is responsible for disrupting the global supply chain. Several long-term trends and aggravating challenges created the conditions that brought about this crisis. American companies have increasingly moved manufacturing overseas for decades, which means that an increasing amount of products that American consumers want to buy must be imported. Meanwhile, deteriorating conditions for truck drivers in the United States have made the job incredibly unpopular in recent years, even though the demand for drivers has grown as e-commerce has grown in popularity. This means that, as Americans relied more on online shopping during the pandemic, getting goods from ports to doors has been difficult.
“It’s 40 years of preparation,” Nick Vyas, director of the Global Supply Chain Institute at the University of Southern California, told Recode. “We allowed supply chains to escape without putting contingencies, resiliences in place and other measures in place to ensure that humanity would never be subjected to this.”
The pandemic has exacerbated these problems, which has contributed to the supply chain disruptions we are currently witnessing. While U.S. automakers have imported semiconductor chips from overseas for decades, Covid-19 has forced these companies to compete with laptop and phone makers on the same components. While the pandemic has prompted many veteran truckers to retire early, new drivers have been unable to obtain permits as trucking schools were closed during the lockdown.
Covid-19 has also affected consumer demand – namely which products they want to buy and how much – creating constant changes that the supply chain simply hasn’t been able to keep up with, especially in recent times.
It looks like we’ve had a long time to resolve these issues. Why are they suddenly ruining Christmas?
Global manufacturing has been operating at full capacity for over a year. But without any wiggle room to deal with labor shortages, bottlenecks and delays, the problems just keep piling up. These problems have now reached critical mass. So even though American consumers have started ordering many more products, there is no flexibility in the supply chain to meet this demand.
“Delta has basically conditioned our behavior to say to all of us, ‘Hey, this could go on for a while,’” said Ellen Hughes-Cromwick, senior climate and energy resident at Third Way think tank. “So we went out and bought like crazy.”
This record number of imports is slowing product deliveries. Freighters carrying holiday goods wait to unload their stock along the California coast, but there aren’t enough port workers to do the job. These delays mean there are fewer containers available for manufacturers trying to ship more product to the United States, which only slows the supply chain even further.
We can agree that this is everyone’s problem. But what is Biden actually doing about it?
Pushing the Port of Los Angeles to operate 24/7 is Biden’s most direct action yet, and it’s supposed to ensure that 3,500 more cargoes are unloaded every week. The Port of Los Angeles and the Port of Long Beach, which expanded operations last month, are responsible for 40% of containers imported into the United States. Expanding their operations is therefore supposed to speed up shipments nationwide, according to the White House.
This move will help reduce the number of ships waiting to berth, but it only affects the later stages of supply chain issues: shipping and delivery. At this time, it’s unclear exactly what Biden can do to address bottlenecks occurring higher in the supply chain, such as manufacturers running out of components and closed factories overseas. While the White House has convened task forces to address these underlying issues, those efforts are unlikely to bear fruit in time for the holidays.
“This is more of a demand and supply situation, more than a government situation,” said Patrick Penfield, professor of supply chain management at Syracuse University. “The government has a role to play in regulating and enforcing laws, creating laws and trying to spur development. But other than that, they are powerless as to how the trade works. ”
If Biden can’t fix it, who can?
No one can solve supply chain problems before the holidays because they are too complicated. Factories can’t immediately increase their manufacturing capacity, and more people suddenly won’t receive trucking licenses just because American consumers want to buy more stuff. Severe weather events in Texas, an energy crisis in China and a fire at a chip factory in Japan also created new hurdles.
In the long run, it is possible that the US government may be able to change the policies that contributed to this situation in the first place. Politicians could change their approach to commerce, which historically encouraged American companies to manufacture products overseas. Improving labor standards could improve working conditions for truck drivers and factory workers to make these jobs more attractive – boost global vaccine manufacturing and ensure workers in other countries are safer of Covid-19 epidemics. Admitting more people to the United States could alleviate a shortage of couriers and port workers.
The government might even consider redeploying the Defense Production Act, a Cold War-era law that gives the president certain powers over domestic manufacturing in the event of a crisis. For example, the US Department of Commerce is considering how to use this law to manage the US supply of semiconductor chips.
But these ideas are a reminder that US supply chain policy does not exist in a vacuum. It is an amalgamation of all kinds of broader policy choices that are not that easy to change.
When is all this going to end?
Some experts say it will be months before these supply chain issues resolve themselves. Others believe these disruptions represent a new normal that could last for years. Either way, there is no reason to believe that these issues will be resolved by the holiday season. In fact, the White House has already said there is no guarantee that packages will arrive on time.
So are we to blame Joe Biden for spoiling Christmas?