WASHINGTON, Oct. 29 (Xinhua) -- Port congestion has been a glaring part of the ongoing U.S. supply chain crisis. As a major attempt to ease the problem, the ports of Los Angeles and Long Beach are set to fine companies whose containers linger at marine terminals, with the new policy effective starting from Nov. 1.
With rising costs and bare shelves across the country, the jam could derail the holiday shopping season this year with shipping delays and fewer gift options. No immediate solution to this multifactorial mess is on the horizon yet, experts have said. While the issue has emerged quite recently, it exposes long-standing bottlenecks facing U.S. infrastructure.
CRISIS THREATENS HOLIDAY SHOPPING
According to a joint announcement released on Monday by the twin ports, which together handle 40 percent of U.S. imports, ocean carriers are to be charged a fee for truck-bound containers that sit in terminals nine days or more and those set to go out by rail that remain at least three days.
"We must expedite the movement of cargo through the ports to work down the number of ships at anchor," Port of Los Angeles Executive Director Gene Seroka said in a statement.
About one-third of the shipping containers at the ports of Los Angeles and Long Beach in September sat for more than five days after making it off the ship, Goldman Sachs found, compared with low-single digit percentages before the COVID-19 pandemic.
Offshore jam is escalating. Last week, Southern California hit a record high of 100 ships floating off the coast, waiting to enter and unload their cargo, according to the non-profit Marine Exchange of Southern California.
Meanwhile, the economic impact ripples across the country. September saw an increase of 0.3 percent in consumer prices, according to the U.S. Bureau of Labor Statistics, and year-over-year inflation rate was pegged at 5.4 percent. Adobe Analytics said the amount of products out of stock online is up by 172 percent when compared with January 2020.
There are "signs popping up in my local grocery store advising that there may be limited supplies" of some items in the near future, Jennifer Stevens, a 50-something housewife in the U.S. state of New Jersey, told Xinhua.
With the Christmas shopping season approaching, the U.S. administration is facing growing pressure to tackle the supply shortage. Earlier this month, President Joe Biden announced that the Port of Los Angeles will join the Port of Long Beach to operate around the clock and that major companies including Walmart, UPS and FedEx would expand working hours to relieve the backlogs.
Teresa Irvin, a manager in her 40s in the D.C. area, told Xinhua that she would "like to buy a new car" but "might have to wait until next year," because no local dealer has the make and model she wants. It was never a problem before the pandemic, she said.
NO IMMEDIATE SOLUTION
Goldman Sachs warned Monday that backlogs and elevated shipping costs are likely to persist at least through the middle of next year, reported CNN. "No immediate solution for the underlying supply-demand imbalances at U.S. ports is available," the bank's economists said in a report.
This is a broader problem beyond the California ports. Nationally, the time it takes loaded ships to make it through U.S. ports has tripled from historical norms, Goldman Sachs found, noting that the move by the White House "may help at the margin," but also requires cooperation from other ports, truck drivers, rail operators and warehouses.
Some experts echoed the view during their interviews with Xinhua. All indications are that supply chain problems "will remain with us at least until the middle of 2022," said Desmond Lachman, a resident fellow at the American Enterprise Institute, a Washington D.C.-based think tank. "It seems unlikely that either of these initiatives will relieve the supply chain problem anytime soon."
Some issues can be addressed over the next four to six months, but the "shortage of computer chips may last longer," Barry Bosworth, a senior fellow at the Washington D.C.-based Brookings Institution, told Xinhua, noting the semiconductor shortage that has hammered the auto industry.
COMPOUNDING FACTORS BEHIND SHORTAGE
The logjam at the West Coast ports is only a small part of the supply chain problem, Professor Dale Rogers with Arizona State University told Xinhua. "If the White House only looks at that, it will not be nearly enough."
A major shortage of truck drivers is one of the biggest contributors to the supply chain fiasco, as the United States needs to fill around 80,000 truck driving jobs, Chris Spear, president and CEO of the American Trucking Association, told CNN last week. Nearly two-thirds of the country's total freight is moved via trucks, according to the association.
California Trucking Association CEO Shawn Yadon said during a recent Fox News interview that state officials should consider declaring a state of emergency.
On top of it, broad social spending of the U.S. government also partly led up to the crisis, Yossi Sheffi, director of Center for Transportation and Logistics at the Massachusetts Institute of Technology, has told Xinhua recently.
"I think the mistake that the U.S. government made is that the money was given too broadly," said Sheffi. "I understand giving money to people who really need it, but the government did it blankly."
The U.S. federal government has issued three economic impact payments during the pandemic, and most eligible Americans received a total of 3,200 U.S. dollars each.
"When people suddenly got a lot of money from the government, the economy started opening and people started spending. The subsequent demand increase curve was like a hockey stick," said Sheffi.
However, "the supply system is physics -- not people's emotions," the expert added. "There are only so many items that you can produce, and there are only so many ships and containers available to carry those items."
Other countries' anti-virus measures has too played a role, as global supply chains are interdependent where one country's policy impacts upon another, Sheffi said.
As a result, he said, people are working under many uncertainties, and "many companies ordered a lot more products than they really need, just to make sure that they get at least part of their orders."
LONG-RUNNING INFRASTRUCTURE WOES
The supply chain bottleneck, experts said, has brought to light many of long-running U.S. infrastructure woes.
Sheffi has traveled extensively to ports around the world and visited "very automated and very efficient" ones in Singapore, China and Europe.
By contrast, Sheffi said, "the United States has under-invested in our ports, rail, and road infrastructure for decades. The ports of Los Angeles and Long Beach are not automated to international standards. These are some issues that are just beyond short-term solutions."
"The United States was the world leader in terms of transportation infrastructure," recalled the expert. "Our interstate highway, rail, and airline systems were the envy of the world 30 years ago."
West Coast ports have experienced more than a decade of underinvestment by the federal government, Seroka said earlier this month, adding that infrastructure improvements are needed to address the influx of cargo.
A trillion-dollar infrastructure bill that the White House wants to pass contains major federal investments in railways, inland waterways that ship goods, as well as bridges and highways heavily traversed by trucks. The investments also include connecting rural rail lines to the national rail network, which could be more efficient than trucks.
"Aging infrastructure like this (the Portal Bridge) is more than an inconvenience or a nuisance," said Biden in New Jersey on Monday. "It's an impediment -- impediment to America's global competitiveness."
(Xinhua correspondent Huang Heng in Los Angeles, Peter Mertz and Zhang Juan also contributed to the story.)
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