From the lack of refrigerators and toys to an insufficient supply of microchips needed in smartphones and automobiles, supply chain disruptions are leading to price inflation amid a growing shortage of goods. With just weeks before Christmas, supply chain shortages are becoming more and more apparent for Americans in their day-to-day lives, with people worried about the cost of food to getting gifts for their kids.
John Drake, vice president for supply chain policy at the U.S. Chamber of Commerce, has been talking to the White House, business leaders, and news stations across the country about American supply chains and what is being done to ease issues heading into the holidays. Read on for his insights on top-of-mind supply chain questions.
What are the main issues causing supply chain disruption?
A top challenge facing the United States’ economic growth is the supply chain crisis that is crippling the business sector’s ability to timely deliver components and consumer goods. There are two significant drivers for current supply chain challenges. First, U.S. consumer spending is roughly 20% higher than it has ever been. Second, there are thousands of open jobs across the country, especially in the transportation and logistics sectors. There are 80,000 open truck driving jobs, and thousands more open jobs in warehousing, railroads, and ports.
The combination of those two things have resulted in significant delays in moving goods from ports and warehouses to stores.
Are some industries being impacted more than others?
Supply chain challenges are impacting a range of industries, but consumers and small and midsized businesses are bearing the brunt of supply chain disruption.
We have heard from our members that one year ago it would cost $3,000 to move a single shipping container from China to the U.S. Today, that cost has increased to $30,000. There might be no more than $40,000 worth of goods in that container. To offset costs, some small and midsize businesses are raising consumer prices.
I keep hearing gifts might not be available or arrive in time for the holidays. Is that true?
My advice: If you haven't already started your holiday shopping, you should start now. Many consumers shopping in-person are likely already noticing some shortages, and if you’re shopping online, you’re probably experiencing longer delays in getting goods to your doorstep. Americans should be prepared for more of that, especially as we get closer to the holiday season. The most important thing that Americans can do is to start buying now.
Why can’t businesses just hire more people?
Well, it’s not that simple. While it’s imperative we get Americans back to work across our economy, including the transportation sector, we also must make sure that our transportation infrastructure, including our port system, is working better. Unfortunately, that's not a simple solution, and Americans may need a dose of patience.
Sure, but the supply chain issues are just temporary because of the pandemic and not a long-term concern, right?
Not really. Today's supply chain challenges are an opportunity to fix some of the more significant problems in our national transportation infrastructure. Our ports have needed meaningful investments in modernization upgrades for decades. The recent infrastructure bill that Congress passed and President Biden signed into law is a good step forward, but we can't stop there.
We also need to make sure that our ports work faster. Nearly 40% of all U.S. imports pass through the Port of Los Angeles (POLA) or the Port of Long Beach (POLB), the two biggest ports in our country. But if you look at their global rankings, the POLA ranks 328, and the POLB ranks 333. The fact of the matter is that many ports around the world—especially in many parts of Asia including China and Japan, the Middle East, and North Africa—move goods more efficiently than the U.S.
If you are talking about making our country more competitive, growing our economy, and creating more jobs, our ports must be up to the task; they must be doing better than what they are doing right now.
How is the Chamber helping to solve the issue?
Solving the challenge requires coordination across multiple industries, as well as between business and government—which is exactly what the U.S. Chamber is doing.
The Chamber is leading a “coalition of the willing” with top supply chain leaders—including Walmart, Target, FedEx, UPS, Samsung, Home Depot, Stanley, Black & Decker, Proctor & Gamble, and others. We’re working closely with the White House, the Ports of Los Angeles and Long Beach, and other stakeholders to break-up the bottlenecks slowing the movement of goods.
In October our members announced a commitment to move certain volumes of goods during the newly extended operating hours at the Ports of Los Angeles and Long Beach. This also moves these and other ports towards 24/7 operations going forward, which will make our ports globally competitive.
We continue to bring in stakeholders across the supply chain, including drayage operators, major railroads, terminal operators, port leadership, and major shippers. Working together we can solve congestion problems over time.
Do you think that the most help will come from the federal government or large private companies seeing their supplies not getting to those who ordered them?
Everyone has a role to play, and everyone needs to be working to fix this. The supply chain is primarily owned and operated by the private sector, but the federal government has a role in convening stakeholders. But frankly, we can't get into more regulation or finger-pointing. We have to be at the table together, working together to make this better. If we do not do that, it will only get worse.