President Biden announced this week that the Port of Los Angeles will operate 24 hours a day, seven days a week, to address product shortages in the United States. The news came concurrently with the release of Labor Department data that the ongoing supply chain crisis was intensifying. consumer prices and inflation…
Conservatives are turning these events into a fairy tale of how a supply chain disaster ruins Christmas – and it’s all Biden’s fault.
Despite what some people say on right-wing news outlets and social media, recent problems with the global supply chain cannot be blamed on Biden alone. As his recent efforts have shown, the president is trying to help. In fact, these shortages and delays are the product of many end-to-end problems that have existed for years, including the Covid-19 pandemic, growing consumer demand, and a global and highly optimized manufacturing network that does not adapt to rapid change.
As convenient as it is to blame only one person for America’s supply chain problems, the situation and its solutions are too complex for such a simple explanation. Let’s discuss.
So the supply chain is complex. What does this even mean?
The supply chain is how the global economy produces and delivers goods that people buy. It covers all the people, companies and countries that play a role in this process. Technicians factories in Taiwan that make computer chips are part of the supply chain, as are truck drivers delivering goods from warehouses to retail stores in the United States.
Plants that make plastic used for packaging, cargo ships transporting goods from Asia to the West Coast, even Amazon’s fleet of planes are all considered part of this incredibly complex global manufacturing system that has been disrupted dramatically over the past couple of years.
How is the supply chain so tangled?
It’s tempting to blame the pandemic alone for the current supply chain disaster, but in a sense, the pandemic has simply exacerbated existing problems in global trade and exposed some new ones.
The pandemic brought factories to a standstill, usually due to a shortage of workers, and this created a shortage of products and components. This shortage has led to bottlenecks and delays in production (if factories don’t have the parts to build something, it isn’t produced or shipped).
As increasing scarcity leads to more bottlenecks, disruption causes problems in other parts of the supply chain, creating even larger scarcity, new delays, and higher prices. For example, car manufacturers cannot manufacture cars and trucks because they do not have enough computer chips. Ikea can’t details of ship furniture from warehouses to stores due to the lack of truckers. A supply crisis for petrochemicals increased the cost of making everything that includes plastic, including children’s toys…
Who disrupted the supply chain?
Again, no one is responsible for revolutionizing the global supply chain. Several long-term trends and complex issues created the conditions that triggered this crisis. American companies have moved more and more factories overseas for decades, which means that more and more of the goods that American consumers want to buy need to be imported. Meanwhile, the deteriorating conditions for truck drivers in the US have made the job incredibly unpopular in recent years, even as demand for drivers has grown as e-commerce has become more popular. This means that since Americans relied more on online shopping during the pandemic, getting goods from ports to doorsteps has been challenging.
“This is 40 years of development,” Nick Vyas, director of the Institute for Global Supply Chain at the University of Southern California, told Recode. “We let supply chains go without contingencies, reserves of resilience and other measures to ensure that humanity will never be exposed to it.”
The pandemic has exacerbated these problems, leading to the supply chain disruptions we are now witnessing. While American automakers have imported semiconductor chips from overseas for decades, Covid-19 has forced these companies to compete with laptop and phone makers for the same components. As the pandemic has forced many trucker veterans to retire early, new drivers could not get licenses because the truck schools were closed during the isolation.
Covid-19 has also impacted consumer demand, namely what products they want to buy and in what quantities, creating constant change that the supply chain has simply not been able to handle, especially lately.
It looks like we’ve had enough time to fix these issues. Why are they suddenly ruining Christmas?
Global production has been operating at full capacity for over a year. But without any weakness to deal with job shortages, bottlenecks and delays, problems only add up. Now these problems have reached critical mass. Thus, even though American consumers have started ordering much more goods, there is no flexibility in the supply chain to meet this demand.
“Delta has basically conditioned our behavior to tell all of us, ‘Hey, this could be going on for a while,’” said Ellen Hughes-Cromwick, Senior Research Fellow, Climate and Energy, Third Way think tank. “So we just went and bought like crazy.”
This record number of imports slows down the delivery of products. Freighters carrying holiday goods are waiting to unload their supplies along the California coast, but there are not enough port workers to do the job. These delays mean fewer containers are available for manufacturers trying to ship more products to the US, which only further confuses the supply chain.
Agree, this is everyone’s problem. But what is Biden actually doing to fix this?
Moving the Port of Los Angeles to 24/7 operation is Biden’s most direct action to date, and should provide an additional 3,500 cargo ships offloading each week. Port of Los Angeles and Port of Long Beach, which expanded its activities last month, are responsible for 40 percent of the containers entering the U.S., so expanding their operations should expedite delivery across the country. The white house says…
The move will help reduce the number of vessels waiting to dock, but will only affect the later stages of supply chain issues: shipping and delivery. It is currently unclear what Biden can do to eliminate bottlenecks at higher levels in the supply chain, such as manufacturers running out of components and closing factories abroad. While the White House has convened task forces to address these underlying concerns, these efforts are likely to fail by the holidays.
“This is more of a supply and demand situation than a government,” Patrick Penfieldsaid a professor of supply chain management at Syracuse University. “The government plays a role in regulating and enforcing laws, making laws and trying to stimulate development. But otherwise they are powerless about how commerce works. ”
If Biden can’t fix it, who can?
No one can solve supply chain problems before the holidays because they are too complex. Factories cannot immediately increase their production capacity, and more people will not suddenly get a trucking license just because US consumers want to buy more goods. Severe Weather Conditions in Texas, energy crisis in China, a chip factory fire in Japan, too, new obstacles arose.
In the long term, it is possible that the US government will be able to change the policies that contributed to this situation in the first place. Politicians can change their approach to trade, which has historically encouraged American companies to manufacture overseas. Improving labor standards could improve working conditions for truck drivers and factory workers to make these jobs more attractive – stimulate global vaccine production and keep workers in other countries safe from COVID-19 outbreaks. Allowing more people to enter the US could solve the problem of shortages of delivery and dock workers.
The government might even consider reapplying the Defense Manufacturing Act, a Cold War law that gives the president certain powers over domestic production during a crisis. For example, the US Department of Commerce is weighing how to use this law to address US Semiconductor Chip Supply…
But these ideas are a reminder that US supply chain policy does not exist in a vacuum. It is a mixture of all kinds of broader policy options that are not easy to change.
When will it all end?
Some experts say it will be months before these supply chain problems resolve themselves. Others think this disruption represents a new normal that could last for years. However, there is no reason to believe that these issues will be fixed by the holiday season. In fact, the White House has already stated that there is no guarantee that the packages will arrive on time.
So should we blame Joe Biden for the ruined Christmas?