Chaos Sweeps Across US Supply Chains As 75,000 Container Ships Line Up Until The Mexico Coast

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America is facing a neverending supply chain nightmare that only seems to aggravate with each passing week. A couple of days ago, associations representing supply chain workers warned that the whole system is about to fall apart, as its backbone, road transport operators, have massively started to leave the market due to poor work conditions. Months ago, industry insiders warned this could happen, but our leaders didn’t take any preventive action, and now things are going from bad to worse. The International Transport Union (IRU) is calling on the U.S. government for support to avoid bankruptcies and to stabilize the entire transport system before it collapses.
The industry association for road transport represents 3.5 million transport companies and 19 million transport workers around the world. In the United States, at least 8 million truck drivers are represented by IRU, and according to the association’s Secretary General Umberto de Pretto, rapid increases in demand, ongoing movement restrictions, driver shortages and acute fuel price hikes have created a “perfect storm” that can further aggravate supply chain disruptions in the short and longer term.
This week, the IRU issued an emergency call to the U.S. government to urgently address the labor crisis within the supply chain crisis. “We need the government to act now to avoid delays and shortages of products through to the end of the year and into 2022,” said IRU. From September up until now, at least 4.4 million supply chain workers, half of them in the transport sector, have already quit their jobs. And millions are threatening to do the same given that they occupy low-pay positions that require in-person service and exceedingly long work hours.
Such an event would have the potential to completely halt this country, warned Ioana Marinescu, an associate professor of economics in the School of Social Policy & Practice who studies the labor market. The persistent volatility of the labor market can also compromise our economic growth this quarter, as goods remain stuck at ports and retail sales sharply decline, she says. This, combined with the emergence of a new virus variant has added to the uncertainty since movement restrictions are being reintroduced, she added.
Now that overly restrictive travel rules have been put in place once again, the International Chamber of Shipping (ICS) is also alerting that 400,000 seafarers currently stranded at sea are likely to leave their jobs once they get back on shore. In an open letter also issued this week, the association pointed out that 56 countries have already imposed fresh restrictions on travel. And seafarers who had been waiting for months to finally come back home during the holidays to reunite with their families are being prohibited to enter their home countries for a crew change.
On the other side of this situation, this means trouble for millions of U.S. businesses that rely on supply chain operations. With the holiday shopping season at full-speed, delayed shipments and empty shelves can put the final nail in the coffin of several businesses. So far, for many of them, Thanksgiving, Black Friday and Cyber Monday sales were disastrous.
The outcome could be even bleaker for companies that were counting on this season’s sales to help them recover from last year’s closures and even stave off bankruptcy. Meanwhile, 75,000 container ships are still stuck outside the U.S. coast, according to numbers released by the White House. An alarming record and a worrying situation as temperatures drop. At this point, on-the-shelf availability has fallen by 90% compared to 2019 levels, according to market research company IRI.
Since last month, all boats crossing the Pacific have been asked to sit 150 miles offshore as they wait for a slot to unload their cargo. So even though there were only 46 ships outside San Pedro Bay this week, hundreds of container ships that embarked after the change are now wandering in the horizon, which could push the total backlog to a record high. Thousands of small container ships and hundreds of giant cargo ships are now queuing until the coast of Mexico not to get fined as they wait to dock at U.S. ports.
The container fleet may be out of sight, but it’s not out of mind. And our supply chains will continue to struggle to process all the imports entering the country for months to come. Americans are getting increasingly frustrated with our leaders’ inability to tackle this crisis. But what is coming ahead is likely to be even more chaotic than what we’re facing right now. A dark winter has begun and the perfect storm supply chains are facing right now will undoubtedly result in many more disasters.

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Epic Economist

Epic Economist

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