Supply chain woes worsen following Biden’s intervention

Supply chain woes worsen following Biden’s intervention

Paul Mirengoff - Powerline

Two weeks ago, Joe Biden announced with fanfare that he was taking steps towards having our main port facilities operate around the clock to alleviate the supply chain snags that are causing so much disruption. Since then, according to the Washington Post, the backlog of ships anchored off the coast of Southern California has increased.

For example, as of Monday, 73 container ships were anchored in San Pedro Bay. That exceeded the number present when Biden announced his initiative.

According to Goldman Sachs, more than 30 million tons of cargo now sit aboard vessels idling outside of U.S. ports. It predicts that port congestion will not ease until the second half of next year. 

The gridlock is fueling inflation and eating into corporate profits. It’s one reason why estimated third quarter growth in our economy is so disappointing

As for Biden’s remedial plan, in almost all cases West Coast ports aren’t open around the clock, and certainly not seven days a week. And even when ports are open for business 24 hours, they don’t really operate full-time. 

A port can be open at 2:00 a.m. in the morning. That doesn’t mean truck drivers will show up to handle loads, especially if the warehouses to which the loads are headed lack the capacity to handle more goods or don’t open until much later in the morning.

Having failed thus far to improve the situation, Team Biden is now resorting to punitive measures. Ports will bill carriers $100 per day for each container that remains on the dock for more than three days if slated to move by rail, or nine days if by truck. 

Punishing carriers for bottlenecks in the supply chain seems unfair and ineffective. Stephen Lamar, president of the American Apparel and Footwear Association, said:

[The] decision to apply new surcharges does not resolve our ever-worsening supply chain crisis and we fear carriers will see this as another opportunity to stick shippers with the bill on top of already massive freight costs.

The National Retail Federation, representing companies such as Walmart, Target and Macy’s, said:

Key issues such as chassis availability and empty container returns still need to be addressed. We encourage ocean carriers to continue to work with importers and truckers to move cargo as quickly as possible and not just pass along the cost of the fee, which will further exacerbate the problems

Matt Schrap, CEO of the Harbor Trucking Association, complained that the new fees will do nothing about the “tens of thousands of containers” sitting empty on chassis, either at the port or at area warehouses that are too full to unload them. Until those chassis can be unloaded and returned to the port to collect fresh loads, the backlog will linger, he added.

Some say the supply chain crisis is an argument for infrastructure spending. If so, Biden should explain why less than 10 percent of his $1.2 trillion infrastructure bill is devoted to fortifying core infrastructure such as roads, bridges and ports.

The elephant in the room is a workforce that, to an unprecedented degree, would rather not work and has been incentivized not to by unprecedented unemployment benefits. The shortage of truck drivers contributes significantly to the supply chain crisis. That shortage will be exacerbated when truck drivers are fired for refusing the Wuhan coronavirus vaccine. 

It’s also the case that our ports have been overregulated into inefficiency. According to Mario Loyola:

A recent review of container-port efficiency ranked the ports of Los Angeles and Long Beach below ports in Tanzania and Kenya, near the bottom of the list of 351 top ports. America’s ports are effectively third-world. The 50 most efficient ports in the world are mostly in Asia and the Middle East; none are in America.

I doubt there is any short-term answer to the supply chain crisis, so it’s not surprising that Biden is flailing, much as Trump flailed in responding to the pandemic to which there was also no short-term answer. The public, though, is not accustomed to being unable to obtain pretty much anything it wants and can afford to buy. Thus, it’s likely to hold the difficulties associated with the supply chain crisis against Biden. 

That’s more bad news for a president whose approval rating seems to tumble on almost a daily basis.