Why you should care about the supply chain logjam?

Why you should care about the supply chain logjam?

President Joe Biden on Wednesday, Oct. 13, announced that the Port of Los Angeles will move to 24/7 operations in order to help clear up a historic backlog of cargo ahead of the holidays.

The move is just the latest among multiple efforts in recent months to clear up the supply chain, which is currently overwhelmed.

But, as multiple officials said Wednesday, the supply chain is complex — so you likely have questions.

Well, here are some answers.

What is the supply chain — and why should I care about it?

In simple terms, the supply chain is the route goods take from where they’re made to store shelves or, increasingly, your doorstep.

Here’s an example: Say you’re shopping online and find an item you like. A barbecue grill, for example. You put it in your cart, check out and pay.

If the company from which you bought it has it already in a warehouse, then workers can package it and ship it to you quickly.

But what if it does not? Well, then, the company may need to order from a factory — likely one overseas.

The barbecue would travel from the factory to a foreign port, get put on a ship and sent across the ocean to the U.S. American port workers unload the cargo and put it on a truck or a train, which then carries the cargo, including your barbecue, to a regional distribution center.

Only then can your barbecue begin the relatively short journey to your house.

And why does this backlog matter? What’s the impact?

The impact is potentially massive.

Because much of what you purchase comes from overseas.

Last year, for example, imports to the U.S. equaled about $2.8 trillion, according to U.S. Census Bureau data.

The Ports of Los Angeles and Long Beach, meanwhile, represent about 40% of that — making them the first- and second-busiest ports in the nation.

So if there’s a backlog, that means delays in goods making it to their destination.

That’s why you may have seen shortages of some goods recently. It’s also why retail executives have warned folks to get their holiday shopping done early

Wait, so this could make it harder to buy presents?

We’ll let Ed Desmond, executive vice president of the Toy Association, take this one:

“Get out and buy toys now,” he said in mid-September. “If you see toys you think the kids are going to want for Christmas, pick them up now and tuck them away to make sure you have them. Right now, stores have a pretty healthy supply. We just don’t know what’s going to happen when we get down the road closer to Christmas.”

Why is there a backlog at all?

The short answer is the coronavirus pandemic.

The longer answer is the supply chain — which officials have long worried was vulnerable to being overwhelmed — hasn’t been able to keep pace with surging consumer demand brought on by changes in buying habits during the pandemic.

So my online shopping is to blame?

Well, not exactly. Consumer spending is great for the economy.

But before the pandemic, people spent a lot of disposable income on vacations, dinners out, concerts and the like.

That went away in 2020. And after the initial round of shutdowns crashed cargo numbers, consumers adjusted and began spending whatever cash they had on online shopping.

The result was a spike in cargo that led the L.A. and Long Beach ports to break records throughout the second half of 2020 and much of this year as well.

And the supply chain is so massive that if there’s a hiccup in one corner of it, every other corner will soon feel it.

Containers came to the ports faster than dockworkers could handle them or trucks or trains could carry them out.

The ports also saw shortages of already overburdened longshore workers at times last year because of COVID-19. Then there was a trucker shortage.

That caused containers pile up both at the ports and at regional warehouses. Eventually, there was no place to put containers — so they sat on ships.

The line of ships waiting to dock at the ports then got longer and longer and longer. That line now routinely extends to South Orange County.

That sounds bad. So how do we solve it?

Well, port and White House officials know how to solve it in theory: make the supply chain more efficient, including by expanding hours.

That’s the key from Wednesday’s announcement.

But here’s the rub: that’s not easy in practice. You need enough workers to expand operations at the ports. You need enough truck drivers — many of whom are independent and underpaid — to transport the cargo and they need to be able to navigate or avoid rush hour traffic.

The trucks and trains need someplace to put the cargo — so warehouses can’t be filled to capacity.

As of Wednesday, there weren’t many details on how to actually achieve that.

But it likely won’t happen overnight.

So I should definitely do my holiday shopping early?

That would be wise.

By the numbers

450 billion: Approximate value, in dollars, of cargo that goes through the twin ports of LA and Long Beach

10 million: Number of containers the Port of LA moved last fiscal year, a 12-month record for any port in the Western Hemisphere.

3 million: Number of jobs the twin ports create throughout the U.S.

138: Number of vessels at the ports on Wednesday

40: Percentage of U.S. trade that goes through the twin ports.


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