The holiday season is coming, and the persisting global supply chain crisis is all set to make it the worst of its type in modern-day economies.
At a time when businesses were looking forward to making big sales during the holiday season to improve their dwindling business models caused by COVID-19, the disrupted global supply chain has backfired, slashing the hopes of businesses and consumers.
The prevailing backlogs at almost 77% of the global ports are contributing to making the shelves in the shopping marts empty.
There are enough goods present at the port, but the manpower required to unload the containers and deliver the materials to the consumer markets is lacking.
The COVID-19 pandemic and especially the Delta variant affected the global supply chains badly. The countries heavily dependent on trade are especially affected, as the principal problem resides with the shipping of materials from the ports to the consumer markets.
And the problem is not impacting any one single industry. As the name suggests, the supply chain is a combined entity where a delay in one sector triggers a delay in another.
For instance, the shortage of computer chips is causing an immense problem for the vehicle manufacturing industries in the US, especially for General Motors and Ford.
So, while the production of the cars is impacted, the chip manufacturers have no one to sell their products to, which is bringing the business into financial losses.
Global Supply Chain Crisis: Massive Traffic Jam at Ports is Impacting the Average Consumer
In the US, the consumer demand for products is now on the rise again, primarily due to the immense sales season, which is coming soon.
People generally wait for the end of the year for Thanksgiving Day, Black Friday, and Christmas sales. However, this time they may have money in their pockets but nothing to buy.
The problem is likely to persist into the foreseeable future, and the Biden administration was aware of the imminent crisis.
In August, Kamala Harris asked people to buy their Christmas presents earlier, which signifies that the administration had the data to foresee the crisis.
But a part of the problem lies in the transition which companies made into the post-pandemic world. When COVID-19 was at its peak, and the vaccination policies were not yet announced, many businesses stopped production due to the government-enforced lockdowns.
The truck drivers followed suit as the unemployment ratio in the sector increased due to the lack of work. Now, when businesses are here to kick start their production again, drivers are still missing from the scene, which is pushing the world towards the crisis.
The ports of Los Angeles and Long Beach are contributing to increasing the backlog more than anyone else. Trucker drivers are missing, labor to unload the ships has left their jobs, not to mention that the railroad backlogs are also causing significant delays in the global supply chain.
And when the companies are lucky enough to find workers to unload the ships and drivers to transport those commodities to warehouses, they still end up facing roadblocks at warehouses, where not enough staff is present for loading and unloading purposes.
These crises are the consequences of the massive job openings in the market, an issue that Mshomi News predicted some time ago. Some reports are also suggesting that vaccination mandates are also driving labor shortage as vaccine-hesitant people continue leaving work not to get their jabs.
The major problem associated with this shortage of containers and ships is the increase in shipping costs. This increase is causing inflation as the supply declined and demand skyrocketed.
Biden Must Walk the Talk to Avert the Crisis
US President Biden met with trade unions, freight movers, retailers, and steamship companies and instructed them to play their part on an urgent basis to overcome these crises.
Retailers and shipping companies have agreed that they will increase their operational time periods. Walmart, FedEx, UPS, and Target have agreed to increase their off-peak operating hours to meet their targets.
This 24/7 hour operation will add almost 60 extras hours per week, and this will reduce the pressure over the supply chain. Many retailers agreed and said that they would try their best to transport goods to their stores and the distribution centers in the shortest possible time in order to overcome this crisis.
President Biden clearly stated that this doesn’t mean supply chain disruptions will end in a day or a week, as he is well aware of the crisis.
He said that this measure will take some time but will help overcome the crisis soon and achieve economic recovery.
Even if Biden walks the talk, the supply chain crisis can take some months to normalize, and this holiday season is bound to be impacted anyway.
The problem of supply chain disruption is not as simple as it appears because there are multiple factors at play driving the trouble.
To overcome the material shortages on an urgent basis, the United States needs to move goods at an exponential rate. But labor shortages and truck driver shortages are presenting a daunting challenge.
Longer port hours are not going to help until there are enough laborers and truck drivers to move goods and raw materials.
In order to overcome this issue, the federal government is in contact with the departments of motor vehicles across different states.
The federal government is asking them to increase the issuance of commercial driving licenses to overcome truck driver shortages.