Retailers are increasingly concerned that there is little that Washington’s efforts can do at this point to save the all-important holiday shopping season.
“There is no political intervention that is going to do this, and there may not be any human intervention that will get there because this problem will now last until next year,” he said. said Steve Pasierb, President and CEO of Toy. Association.
To date, the Biden administration has placed much of the burden on the private sector to fix the grumbling, despite calls from some industry groups to mobilize more federal resources. Senior administration officials say the government has limited oversight of ports and shipping companies. Instead, he used his weight to summon players throughout the supply chain and pressure them to extend their hours of operation.
“The supply chain is primarily in the hands of the private sector, so we need the private sector to come together to help address these issues,” a senior administration official told reporters on Tuesday.
On Wednesday, the White House will announce that the Port of Los Angeles will remain open 24/7, moving to a schedule that the Port of Long Beach adopted three weeks ago. Together, these California ports have the worst backlog in the country, with 80 ships waiting to dock Tuesday night, according to the Marine Exchange of Southern California.
FedEx, UPS, Walmart, Samsung, Target and Home Depot will also start sending drivers to ports on night shifts and longer hours to carry more shipping containers each week. Unions at the White House rally will pledge to provide the workers needed.
Administration officials recognize that these measures alone will not resolve the backlog, which has grown steadily in recent months. They hope Wednesday’s announcements will inspire other retailers, long-haul trucking companies and rail operators to act until the entire supply chain is running nonstop.
“By taking these steps, they’re saying to the rest of the supply chain, ‘You have to move too. Let’s speed it up, ”the official said.
Industry groups want to see the administration make its own scale-up. Some have suggested that sea containers be temporarily moved from docks and onto federal or state land so ships can unload faster, while others have called for military resources and defense funds to be mobilized.
The challenges that focus on global supply chains have taken months, if not years, to prepare. The pandemic has created a dizzying increase in demand for consumer products. In addition, factories and ports in Asia have experienced temporary closures due to the Covid-19 epidemics, extreme weather conditions and electricity breakdowns in China, all of which contribute to shipping delays, product shortages and higher costs.
It’s not that less goods are moving. In fact, ports are handling record levels of imports and the cost of shipping containers has hit all-time highs in recent months due to demand. The supply chain simply cannot keep pace with the high demand for goods – and industry players expect this tension to persist.
In August, the administration hired John Porcari, a former deputy secretary for transport, for a six-month position tasked with reducing congestion at ports – a key bottleneck in the supply chain. Porcari’s job is to “shake heads and clear the backlog immediately,” as Peter Harrell, White House senior director for international economics and competitiveness, put it.
But Porcari’s main recourse has been to arrange meetings with companies at different stages of the shipping process and encourage them to extend their hours and share information about obstacles.
These calls are frequent. Gene Seroka, executive director of the Port of Los Angeles, is on the phone with administration officials several times a day, he said, providing updates on the state of the port’s operations and coordinating news. White House initiatives with others in the supply chain.
“Everything we’ve done is incremental,” Seroka said, but these small changes are paying off, such as reducing the time cargo stays before it gets taken on trains.
Porcari works as part of the Supply Chain Disruption Task Force that Biden established in June. This group looked for short-term solutions to ease the pressure. But the summer start date left little time to do much before the busy holiday shipping season began in earnest in September.
In the meantime, big retailers like Costco, Walmart, Amazon, and Home Depot are looking for their own workarounds. Seroka said some companies have placed holiday orders early in anticipation of delays and sent regional delivery drivers to haul goods away from ports. Others have chartered ships to carry their own shipping containers or rerouted their deliveries to ports outside of California to reduce delays.
“Large companies have more leverage and flexibility to do more within their supply chain than small businesses, so you certainly see a variety of impacts on businesses at all levels,” said Jonathan Gold, vice president of procurement for the National Retail Federation. chain and customs policy.
Independent analysts predict that the crisis will last a long time, forcing the administration to work on long-term solutions as well.
“We may not be able to find short-term solutions at this time, but it is essential to focus on this now so that we do not run into these kinds of problems in the future,” Gold said.
The Biden administration highlighted the bipartisan infrastructure package, which contains more than $ 200 billion in new spending for modernizing transportation to ports, airports, railways, roads and bridges.
The package enjoys broad support from industry groups who say US systems have lagged behind rival economies. China, for example, has invested incredible sums in its own infrastructure over the past decades and continues to do so. But even if the legislation gets House approval and lands on Biden’s desk before the end of the year, it won’t help businesses weather the current crisis.
“It’s a bit like planting an orchard to fight hunger today,” said Steve Lamar, CEO of the American Apparel & Footwear Association, whose members rely heavily on shipments from Asia.
Biden also signed an executive order in July to consolidate the shipping container industry, which he says has hurt U.S. exporters. He instructed the Federal Maritime Commission, an independent federal agency that regulates shipping, to prevent shippers from charging excessive fees. The ordinance also asked the commission to investigate competition concerns in coordination with antitrust authorities.
Dan Maffei, chairman of the Federal Maritime Commission, agrees that excessive fee investigations and market consolidation are not solutions to the vacation crisis either. Maffei said he is sensitive to the plight of parents as the father of a 7-year-old, but he expects them to be able to find alternatives even if the stores sell the most popular toys.
“At the end of the day, there are challenges – because of demand, because of systemic issues – that affect the supply chain,” Maffei said. “They are not going to cancel Christmas but maybe they will make it so that you cannot get the exact toy you want for your children.”