Posts Tagged ‘FedEx’

Supply Chain Update for October 28, 2021

Thursday, October 28th, 2021

Another week, another roundup on the supply chain issues plaguing America and the world.

  • The supply chain problem is one of the big reasons economic growth dropped to an anemic 2% in Q3. The Trump boom/post-Flu Manchu recovery has ended, and the Biden economy has kicked in.
  • Here’s a pretty revealing thread about the Los Angeles/Long Beach Port problems:

    All this, of course, is on top of the previous banning of older trucks and non-union owner operators.

  • But remember: There’s no problem a government “solution” can’t make worse: “Biden hopes fines on lingering cargo containers ease congestion at major U.S. ports.” “The twin ports of Los Angeles and Long Beach will charge carriers $100 per day for each container lingering past a given timeline starting Nov. 1.” Yeah, that’s going to magically conjure trucks and drivers out of thin air.
  • Another problem is the change in containers, and the requirements for matching truck chassis types, has added still another point of failure (from 2015):

    Ten years ago, the largest container vessels that entered the ports carried 8,500 twenty-foot containers, or TEUs. Each shipping company operated their own cargo ships. The containers inside were generally all the same, and they were loaded systematically for efficient unloading at each dock.

    Now, the ships are much larger, carrying 14,000 TEUs, said Philip Sanfield, a spokesman for the Port of Los Angeles, adding that the ships are only getting bigger, and soon ships carrying 16,000 TEUs will enter the seas. The companies have begun forming alliances with one another to share these larger ships. Each company’s cargo containers are different – so it takes longer for dock workers to sort and unload them. It saves the shipping companies money, but makes for longer hours for dock workers and truckers.

    “That’s an inefficiency in the system that is driven by an efficiency: the move toward larger vessels,” says Thomas O’Brien of the Center for International Trade and Transportation at Cal State Long Beach. “But the impact is felt on the dock side.”

    One example of how this plays out: a truck driver spends hours waiting at the docks for the container he or she has been assigned to haul, which has to be moved from the bottom of a tall stack of other containers.

    But even before waiting for a cargo container, the driver must be matched with a chassis – the trailer that the container sits on top of. That process also involves a lot of waiting, and often some hunting. Drivers have to find one that will match the cargo container that he or she has been assigned to haul.

    In the past, this matching process was relatively simple because the shipping companies also owned their own chassis fleets and managed them from their shipyards.

    But during the recession, the shippers got out of the chassis business, turning them over to third-party companies to lease and maintain. The transition has created scattered mix of chassis on various terminals, and ultimately, a chassis shortage at a time when bigger ships are showing up with more cargo. Truckers told KPCC it’s difficult for them to know where they can find a chassis that will match the container they are assigned to haul, and often find themselves on what amounts to a wild goose chase.

    “There were times, when we would have 10 to 15 guys looking for one particular chassis, and we just had to wait,” said Danny Lima, the employee truck driver. “I heard stories that there are no chassis at one certain terminal because they were all at another terminal. “

    “I’m praying that there is going to be a chassis,” says Rafael, the independent trucker. “Because I can spend an hour driving around the terminal looking for chassis.”

  • Another problem: California’s Flu Manchu restrictions.

    California had some of the most stringent COVID-19 limitations of any state in 2020 when the horrendous backlog began. There was a need for more workers as demand for imported goods was skyrocketing, but California had far fewer available due to drastic government restrictions.

    In addition, overly generous government unemployment payouts reduced the need or incentive for people to work, reducing the available supply of willing truckers or longshoremen.

    When the supply chain is pinched like this, inflation rears its ugly head.

    Federal Reserve Chairman Jerome Powell has blamed recent inflation on supply chain bottlenecks. When these bottlenecks occur, consumers and businesses soon experience shortages of basic commodities and goods like new and used cars, washing machines, or medical supplies. Inflation soon follows.

    Unfortunately, many bottlenecks in supply chains occur because of government meddling.

    Politicians’ recent alarm over the Port of Los Angeles should be focused on how government officials forced docks and logistics companies, and everyone else, to follow everchanging, arbitrary COVID-19 restrictions, which worsened repeated green and labor mandates that have gummed up supply chains for years.

  • A trade group for air cargo companies like UPS and FedEx is urging the Biden Administration to push out the vaccine mandate:

    A trade group for air cargo giants like UPS and FedEx is sounding the alarm over an impending Dec. 8 vaccine deadline imposed by President Joe Biden, complaining it threatens to wreak havoc at the busiest time of the year — and add yet another kink to the supply chain.

    “We have significant concerns with the employer mandates announced on Sept. 9, 2021, and the ability of industry members to implement the required employee vaccinations by Dec. 8, 2021,” Stephen Alterman, president of the Cargo Airline Association, wrote in a letter sent to the Biden administration and obtained by POLITICO.

    The letter, sent to the Office of Management and Budget , asks the administration to postpone the deadline until “the first half of 2022.” At issue is the requirement by the Biden administration that federal workers be fully vaccinated by Dec. 8. Unlike private businesses, companies that act as federal contractors cannot opt out by instead submitting their workforces to frequent Covid testing.

    (Hat tip: Not the Bee.)

  • Our supply chain problems are a culmination of years of bad policy decisions by America’s elites:

    Our vulnerability to supply chain disruption clearly predates the Biden Administration, forged by the abandonment of the production economy over the past 50 years by American business and government, encouraged and applauded by the clerisy of business consultants. The result has been massive trade deficits that now extend to high-tech products, and even components for military goods, many of which are now produced in China. When companies move production abroad, they often follow up by shifting research and development as well. All we are left with is advertising the products, and ringing up the sales, assuming they arrive.

    Unable to stock shelves, procure parts, power your home, or even protect your own country without waiting for your ship to come in, Americans are now unusually vulnerable to shipping rates shooting up to ten times higher than before the pandemic. Not surprisingly, pessimism about America’s direction, after a brief improvement Biden’s election, has risen by 20 points. The shipping crisis is now projected to last through 2023.

    Not everyone loses here. For years the American establishment saw China as more of an opportunity than a danger. High-tech firms, entertainment companies, and investment banks profit, or hope to, from our dependency, becoming in essence the new “China lobby.” Behind the scenes these representatives of enlightened capital often work to prevent condemnation for the Middle Kingdom’s mercantilist policy, and its joint repression of democracy and ethnic minorities.

    After all, the pain is not felt in elite coastal enclaves, but in Youngstown, south Los Angeles, and myriad other decaying locales. Meanwhile, by enabling China’s focus on production, and the conquest of technologies related to making goods, we have devastated large parts of our country. This shift has cost us 3.7 million jobs since 2000. Throughout the period between 2004 and 2017, the U.S. share of world manufacturing shrank from 15 to 10 percent, while our reliance on Chinese inputs doubled, even as our dependence on Japan and Germany shrank.

    Snip.

    Some businesses are catching the drift. McKinsey and Company surveyed supply chain executives last year and found that nearly all respondents agree that their supply chains are too vulnerable. According to March 2020’s Thomas Industrial Survey, COVID-19 supply chain disruptions accelerated the search for locally-sourced materials and services. Up to 70 percent of firms surveyed said they were “likely” or “extremely likely” to re-shore in the coming years.

    The exodus from China also includes Asian and other foreign firms. UBS projects 20 to 30 percent of all Chinese capacity moving, which on $2.5 trillion of Chinese exports would imply $500 billion to $750 billion shifting elsewhere, notably to the big market of North America. Last year, Taiwan Semiconductor Manufacturing, the world’s leading chip foundry, decided to build a $12 billion new plant in Arizona, and Samsung, a huge Korean chipmaker, is also shopping in the United States for a $17 billion plant. This would remove one of the most devastating causes of supply chain problems, which has dramatically slowed auto production.

    Some major American companies, including Black and Decker, Whirlpool, General Electric, Apple, Caterpillar, Goodyear, General Motors, Little Tykes, and Polaris have begun to reshore some production. They are not alone. In 2019, for the first time in a decade, the percentage of United States manufacturing goods that were imported dropped, notes a recent Kearny study, with much of the shift coming from east Asia.

  • “After years of ‘Made in China,’ supply chains consider alternatives.”

    The “Made in China” label is ubiquitous in the United States, stamped on everything from industrial machinery to a pair of flip flops. But risks — from rising costs, to a trade war, to a pandemic — have prompted companies to rethink their relationships with suppliers and China.

    “We’ve realized that we put too much power in a single country,” said Dawn Tiura, CEO of Sourcing Industry Group.

    Snip.

    The same risk factors that drove supply chains to diversify also drove them to think about reshoring to the U.S. Proximity allows shorter transit times, lower emissions and the ability to tout a “Made in USA” label. Import duties are no longer a concern. Total cost of ownership is often lower.

    A Thomas study that polled respondents in March found 83% of manufacturers are likely, very likely or extremely likely to reshore, up from 54% in March 2020. But reestablishing manufacturing bases in the U.S. could prove challenging, after decades of standing them up in Asia and Latin America.

    “It is extremely difficult to reverse the 30+ year trend of outsourcing and offshoring manufacturing to emerging market countries,” a chemical manufacturer in the Thomas survey said. “We no longer have the talent and expertise nor capital equipment to effectively manufacture key critical components of major products and assemblies.”

  • “Ace Hardware Shelves Go Bare While Supply Chain Crisis Rages.” “We order twice a week. Normally it just takes two or three days to get back in stock on something…But during the pandemic and then with a certain category being out of stock, we’ve been out of certain products for three or four months.”
  • More on part supply shortages:

  • Health supplies:

  • Heh:

    As far as local conditions in Texas, I can say that I’m only seeing small disruptions in the grocery store supply chain at my local HEB. Luncheon meat was very short there on a recent visit, but I didn’t notice any other particular absence. A few weeks ago, the big Member’s Mark store brand toilet paper at Sam’s was completely out, but it had been completely refilled a week later.

  • Reminder:

  • Here’s a piece that says lazy crane operators are to blame, according to some truck drivers. “The crane operators take their time, like three to four hours to get just one container.” Eh, something about this doesn’t ring true. Maybe they had to wait three or four hours for the operator to get their container off the stack.
  • Is the supply chain problem being deliberately inflicted on the American people to force them to swallow the vaccine mandate?

    Deputy Treasury Secretary Wally Adeyemo may have accidentally leaked the cause of America’s supply chain issues.

    “The reality is the only way we’re going to get to a place where we work through this transition is if everyone in America and everyone around the world gets vaccinated,” Adeyemo admitted in an interview with ABC News.

    Starve them out, let the dissenters suffer, and those who bought into this agenda will turn against them.

    Adeyemo said that the Biden Administration has already provided “the resources the American people need to make it to the other side.”

    Basically, everyone should give into the vaccine mandate or face the consequences. They are masking authoritarianism as utilitarianism. The vaccine has not been mandated at the federal level in the US, yet, but it is apparent that the government plans to make life as difficult as possible for those who do not obey.

    Echoing the Fed, Adeyemo said that inflation is “transitory,” and “as part of the transition we are seeing higher pieces for some of the things people have to buy… That’s exactly why the president was focused in the American Rescue Plan in ensuring on getting stimulus into the hands of the American people, so they’d be able to buy the products they need.”

    Yes, the government expects us, the Great Unwashed, to be thankful for their measly handouts to purchase unavailable products at an all-time high. There is a reason people have recently nicknamed the president “bare shelves Biden,” with the hashtags #BareShelvesBiden and #EmptyShelvesJoe becoming a viral sensation.

    Although the Biden Administration met with the Ports of Long Beach and Los Angeles, which handles 40% of the nation’s goods, the promise of a 24/7 operation has not yet occurred. There is no ETA for when the ports will begin 24/7 operations either. Some ships are allegedly waiting 12 days at anchor before reaching the dock, and over 60 vessels are idled in the San Pedro Bay at the moment. With one of the nation’s busiest shopping holidays approaching (Black Friday) followed by ongoing seasonal shopping, this matter is likely to turn ugly.

  • Other voices of the same opinion

  • Relevant to LA and Long beach’s problems: “Port of Houston Awards Contract to Begin Houston Ship Channel Dredging.”

    • Tags:, , , , , , , , , , , , , , , , ,
    Posted in Democrats, Economics, Regulation, unions | 6 Comments »