U.S. supply shortages in time for Christmas

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U.S. supply shortages in time for Christmas

WASHINGTON Reuters - President Joe Biden is pushing to tame shortages and ease rising prices in time for Christmas, but unsnarling U.S. supply lines could take far longer, experts told Reuters.

Biden brought powerbrokers from ports, unions and big business together on Wednesday to solve shipping, labor and warehousing pain in the U.S. supply chain and announced new round-the-clock port operations in Los Angeles.

As his Republican opposition spouts possible Christmas shortages to connect Biden's economic policies to inflation and try to stall a multitrillion-dollar spending bill in Congress in coming weeks, the White House's message Tuesday was that a solution is in sight.

This is an all-out commitment to Biden, a Democrat, to go to 247 and not on the news cable. The port opening and a promise from retailers like Target and Walmart to move more merchandise at night are the big first step, he said. Now, he said: We need the rest of the private chain to step us as well. While more cooperative cooperation among the often competing, incremental players in the U.S. supply chain is a plus, the White House's influence may be indirect at best, logistics experts, economists and labor unions warned.

What the president is doing isn't going to hurt. But at the end of the day, it doesn't solve the problem, said Mizuho Securities's chief economist Steven Ricchiuto.

Americans are already the world's biggest consumers, as of now importing much more. Couple that with labor shortages, equipment shortages and a lack of space to store that stuff nationwide.

Players from ports to retail chains are already working full-tilt to handle the pandemic-fueled surge in imports and get holiday gifts onto shelves and e-commerce centers in time for the Nov. 26 Black Friday kick off of the 2021 holiday season.

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That has left 250,000 containers of goods stacked on the docks through delayed pickups, due to chassis shortages and a lack of space at rail yards and warehouses. But that is causing many ships to back up outside the port at anchor.

There's a lump in it and the lump is the constraint in the supply chain throughput, and moves along each time you solve for a constraint, said Joe Dunlap global head of the supply chain advisory team at CBRE Group, a commercial real estate services firm.

Frank Ponce De Leon, Union Coast Committeeman, interstate longshore supply organization, described the problem at U.S. ports, which the Commerce Department estimates handle 76% of all trade, during comments last week.

If you don't buy a church for Christmas and Easter, you build it for regular Sunday service, he said. With the unprecedented influx of cargo, it's like Christmas and Easter on every single day, with more ships coming in and the pews have been full for months, and there's nowhere left to sit - or stand. Dockworkers remain available for 24 hour shifts to help clear the port backlogs, the Longshore Union said. But this is not true of the people moving goods to port or from the ships, other unions say.

One of the major problems with the current state of logistics is the shortage of port truck drivers. They are not paid a living wage, said Teamsters General President Biden, who also participated in the meeting with Jim Hoffa.

The backup may be exacerbating that shortage, because many port drivers have not been paid for the hours they waited to pick up a container, which makes the job less appealing.

Still, there is no evidence experienced workers are sitting on the sidelines - U.S. transportation and warehousing are employing more people now than they did before the pandemic began, data from the Bureau of Labor Statistics show.

Similar to seaports, warehouses work best when they are moving items quickly and predictably. Instead, port officials say they are stretched to the rafters and struggling with employee recruitment and retention.

US companies are leasing warehouse space at record levels to handle the huge influx of goods for e-commerce.

The markets that serve southern California ports include Los Angeles and Inland Empire - Region near, which had second-quarter vacancy rates of 1.2% and 1.4%, respectively, according to CBRE data.

Dunlap said space is clearly tight, unveiled.

It is not just that warehouses are at capacity, was John Porcari, CEO of the International Warehouse Logistics Association, in a recent letter to Steve DeHaan, port envoy for the White House Supply Chain Disruptions Task Force.

Warehouse owners, tenants and employment employers can be different companies, which makes drawing up new contracts to pay round-the-clock workers difficult. The warehouse cannot arbitrarily make this decision, DeHaan said.

Moving a warehouse to 24-7 operations adds another layer of risk, he said.

For example, receiving a container at 6 a.m. that was scheduled for 3 a.m. delivery disrupts operations for the entire day, DeHaan said. The goal to reduce container congestion over the next 90 days is ambitious.