With Ports Clogged, Some Retailers Are Looking for Alternative Supply Chains
Eric Bohem - Reason
(Image of Sport/Newscom)
With ports clogged and supply chains snarled in advance of the holiday shopping season, some major U.S. retailers are taking unprecedented steps to get goods onto store shelves.
That includes chartering their own cargo ships to import goods.
The Wall Street Journal reports that Walmart, Target, Costco, and Home Depot are among the major retailers to adopt the "if you want something done right, do it yourself" approach to importing goods. Worker shortages and COVID-19 protocols have slowed trans-Pacific shipping considerably—it now takes about 80 days to transport items from Asia to the U.S., about twice as long as it did before the pandemic, the Journal reports.
While some politicians are quick to blame the global system of trade for the ongoing supply chain issues America is experiencing, it's clear that many of the bottlenecks are domestic issues. For example, major ports in Europe and Asia operate around the clock, but American ports run at about 60 percent capacity because they close at night and on Sundays. Even when dozens of ships are waiting to be unloaded, inflexible union rules that govern dockworkers' and truckers' hours make it difficult to meet swelling demand.
By chartering smaller, private ships to carry their goods, retailers like Walmart are hoping to bypass the backlogs by landing at smaller ports up and down the east coast. That will cost more money—and those costs will be passed onto consumers—but that's better than running out of inventory during the Christmas rush. Home Depot, for example, is relying on chartered ships to deliver only a small percentage of its overall inventory with a focus on high-demand items like plumbing supplies, power tools, holiday decor, and heaters, the Journal reports.
Getting goods onshore is only half the battle. There are plenty of other bottlenecks to be navigated, like a 25-mile freight train backup that occurred at a major shipping facility outside Chicago earlier this year. At the port in Savannah, Georgia, The New York Times reports that workers are "running out of places to put things" as they unload ships, snarling both ground- and sea-based transportation.
Frustratingly, it isn't at all clear how long it will take to resolve what The Atlantic's Derek Thompson has deemed "the Everything Shortage":
The coronavirus pandemic has snarled global supply chains in several ways. Pandemic checks sent hundreds of billions of dollars to cabin-fevered Americans during a fallow period in the service sector. A lot of that cash has flowed to hard goods, especially home goods such as furniture and home-improvement materials. Many of these materials have to be imported from or travel through East Asia. But that region is dealing with the Delta variant, which has been considerably more deadly than previous iterations of the virus. Delta has caused several shutdowns at semiconductor factories across Asia just as demand for cars and electronics has started to pick up. As a result, these stops along the supply chain are slowing down at the very moment when Americans are demanding that they work in overdrive.
None of the problems facing supply chains are interminable or unsolvable—just annoying. As the Journal's reporting indicates, the profit motive is doing its best work to keep goods flowing by getting companies to think outside the box. And the current mess is in some ways an illustration of how remarkable the modern world of global trade really is: something that you can only fully appreciate when it isn't working quite right.