President Joe Biden on Wednesday, Oct.13, announced that the Port of Los Angeles will operate 24/7 to help clear historic cargo backlogs ahead of the holidays.
The move is just the latest in many attempts in recent months to clarify the currently congested supply chain.
But as several officials said Wednesday, the supply chain is complex, so you are likely to have questions.
Well, here are some answers.
What is a supply chain and why do I need it?
Simply put, a supply chain is the route that goods take to store shelves or, increasingly, to your doorstep.
Here’s an example. Let’s say you are shopping online and find a product you like. For example, a barbecue grill. You put it in the basket, pay and pay.
If the company you bought it from already has it in stock, workers can wrap it up and ship it to you quickly.
But what if it isn’t? Well, then the company might need to place an order at a factory – most likely overseas.
The barbecue was shipped from the factory to a foreign port, placed on a ship, and shipped across the ocean to the United States. American dock workers would unload cargo and put it on a truck or train, which would then carry the cargo, including your barbecue. , to the regional distribution center.
Only then can your barbecue start the relatively short journey back to your home.
And why does this lag matter? What is the impact?
The impact can be overwhelming.
Because a lot of what you buy comes from overseas.
For example, last year imports to the United States amounted to about $ 2.8 trillion, according to the United States Census Bureau.
Meanwhile, the ports of Los Angeles and Long Beach account for about 40% of that volume, making them the first and second busiest ports in the country.
Thus, if there is a backlog, it means delays in the delivery of goods to their destination.
Therefore, recently, you may have encountered a shortage of some goods. This is also the reason that retail executives have warned people to shop early for their holiday shopping.
Wait, so what might it be difficult to buy gifts?
We’ll let Ed Desmond, executive vice president of the Toy Association, take this:
“Get out and buy toys now,” he said in mid-September. “If you see toys that you think the kids want for Christmas, grab them now and put them away to make sure you have them. There are good stocks in stores right now. We just don’t know what will happen when we drive closer to Christmas. “
Why is there a lag at all?
The short answer is the coronavirus pandemic.
The longer answer is that the supply chain, which officials have long feared might be overwhelmed, could not keep up with the surging consumer demand caused by shifting shopping habits during the pandemic.
So are my online purchases to blame?
Not certainly in that way. Consumer spending is very beneficial to the economy.
But before the pandemic, people spent a significant portion of their disposable income on vacations, dinners, concerts and the like.
This disappeared in 2020. And after the initial round of stops drastically cut the amount of cargo, consumers adjusted and started spending all the money they had on online purchases.
The result was a surge in cargo, which saw the ports of Los Angeles and Long Beach break records in the second half of 2020 and also for much of this year.
And the supply chain is so massive that if there is a disruption in one corner, every other corner will soon feel it.
Containers arrived at ports faster than dock workers could handle them, trucks or trains could take them out.
In the past year, ports have also sometimes experienced shortages of already overloaded port workers due to COVID-19. Then there was a shortage of truckers.
This led to the accumulation of containers both in ports and in regional warehouses. In the end, there was nowhere to put the containers – so they boarded the ships.
The line of ships waiting for docking in ports grew longer and longer. This line now usually extends into South Orange County.
Sounds bad. So how do you fix this problem?
Well, representatives of the port and the White House know how to solve it theoretically: to make the supply chain more efficient, including by increasing working hours.
This is the key to Wednesday’s announcement.
But here’s the catch: it’s not easy in practice. You need enough workers to expand your port operations. You need a sufficient number of truck drivers – many of whom are independent and receive low wages – to transport cargo, and they need to be able to navigate or avoid rush hour traffic.
Trucks and trains need storage space, so warehouses cannot be filled to capacity.
As of Wednesday, there weren’t many details on how to achieve this.
But, most likely, this will not happen overnight.
So I definitely need to do my holiday shopping early?
It would be wise.
450 billion: The approximate dollar value of the cargo passing through the twin ports of Los Angeles and Long Beach.
10 million: The number of containers transported by the Port of Los Angeles last fiscal year is a 12-month record for any port in the Western Hemisphere.
3 million: Number of jobs created by twin ports across the United States
138: Number of ships in ports on Wednesday
40: The proportion of US trade passing through the twin ports.