U.S. expands shipping services amid global supply chain slowdown
As global economies try to recover from COVID-19, disruptions in the global supply chain are threatening progress.
Cargo ships are stuck offshore, waiting to enter ports. And without enough truck drivers and other workers, supplies are taking longer to distribute.
This supply chain traffic jam is causing a rise in prices and “will get worse before they get better,” warns Moody’s Analytics in a new report.
But while there is a backup in distribution, the factories and companies that make and assemble products have also been facing setbacks because of the COVID-19 pandemic.
“Border controls and mobility restrictions, unavailability of a global vaccine pass, and pent-up demand from being stuck at home have combined for a perfect storm where global production will be hampered because deliveries are not made in time, costs and prices will rise and GDP growth worldwide will not be as robust as a result,” writes Moody’s Analytics.
For the United States, the International Monetary Fund (IMF) decreased its 2021 growth forecast. Now the U.S. is expected to have the lowest growth of any G7 nation, reports CNN.
In September, U.S. consumer prices rose 0.4%…. pushing the overall gain to 5.4% compared to last year.
The IMF is urging the Federal Reserve and others to prepare in case inflation persists. This would mean the Fed would need to raise interest rates sooner than expected.
Fed officials are calling the current inflation ‘transitory’, according to CNBC. They believe the supply chain congestion and demand issues causing inflation will clear up in the coming months.
To help U.S. shipping services speed up, three of the largest goods carriers in the nation, Walmart, FedEx and UPS, will start working 24 hours a day, seven days a week, President Joe Biden announced.
The Port of Los Angeles will also begin 24/7 service. The port of Long Beach began 24/7 service three weeks ago, according to an official.
40% of imported U.S. goods come in through these two ports, said Biden during Wednesday’s news conference.
On Wednesday he met with union leaders, the CEO’s of top retailers in the nation and others to discuss how the private sector can improve the shipping and distribution bottleneck.
Home Depot, Costco and Walmart have also begun chartering their own ships to move products across the Pacific.
Biden also pushed for the passing of legislation to improve U.S. infrastructure, which includes rail systems, ports and roads that are used to transport goods across the country.
As of Tuesday, 27 container ships were waiting to unload their goods at the Port of Los Angeles, according to the New York Times. The average anchorage time is now more than 11 days.
Officials hope that expanding services throughout the night will help move goods faster, considering there is less traffic and other obstacles that typically happen during the day.
“Those disruptions in the supply chain don’t go away overnight, but opening up night capacity through that entire chain is the fastest way and the most effective long-term way to actually turn it around,” said a White House official reports The Hill.
Analysts say supply chain issues could persist into late 2022 or reach into 2023, according to the NYT.
The White House has warned empty shelves and high prices could be seen this holiday season because of the jam in the global supply.
Experts say governments could help alleviate the traffic jam by encouraging people to work in the industries experiencing labor shortages.