Supply chain issues could be here to stay – The Daily Gazette
In the fall I needed a vinyl shower curtain liner and was amazed to find empty shelves at my local Walmart and Target stores.
I checked periodically for a while and the same sterile sight greeted me each time. Even this week the shelves were bare except for a vinyl liner at Walmart.
Nearly two years after a race for consumer goods upended the U.S. supply chain at the start of the coronavirus pandemic, the flow of goods is still choppy and random shortages persist.
When will things get back to normal? Maybe never, says a new report from investment banker RBC Capital Markets, which looks particularly at the bottlenecks of ships and containers in the ports of Los Angeles and Long Beach in California, the busiest in the country.
Part of the blame lies with the “hellish” levels of demand from consumers who started shopping online during the pandemic and continue to do so, rather than spending on services such as entertainment and travel as COVID infections persist, says Michael Tran, chief digital intelligence strategist at RBC Capital and author of the report.
The average American household has more discretionary income, based on higher savings rates of late, he noted last week in a supply chain webinar hosted by The Food Institute, so consumers continue to “order” stuff “online”.
Hypothetically, then, “if consumer demand for goods remains high in perpetuity at current levels, the Ports of Los Angeles and Long Beach would never be able to fully clear the backlog and untangle the supply chain. “, said Tran.
The RBC Capital report looked at 22 ports around the world and placed the ports of Los Angeles/Long Beach – which grabbed headlines in October and November as ships lined up offshore waiting to unload – at the bottom of a list of port runtimes.
In LA/Long Beach, the time now required for a ship to enter, unload, reload and depart is 7.5 days, compared to 3.5 days before COVID. By contrast, turnaround times at some major Chinese ports have decreased since 2019, due to increased automation, according to the report.
Beyond the bottlenecks in Los Angeles/Long Beach (which the Wall Street Journal reported this week are spreading to other US ports), a “cobweb of trouble” awaits, said Tran. “So the goods cannot move even when they are out of port.”
Those issues include a shortage of trucks and drivers, with RBC Capital putting the country at 85,000 drivers. Meanwhile, load-to-truck ratios – the demand for trucks – are two to three times higher than in 2019, depending on the type of trailer.
China’s zero-tolerance COVID policy has resulted in occasional disruptions at its ports, giving the United States respite from the “conveyor belt of ships” heading here, according to the RBC Capital report.
But, he says, “[a]In the absence of medium-term infrastructure investment, bottlenecks will become structural “assuming the current level of consumer demand persists”.
Marlene Kennedy is a freelance columnist. The opinions expressed in his column are his own and not necessarily those of the newspaper. Join her at [email protected].
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