Dennis Sun: What’s It Going To Take To Fix The Supply Chain Issue?

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By Dennis Sun, Wyoming Livestock Report

Those who have been watching the news lately will soon notice one of the biggest stories is the massive supply chain issue. This all comes through as we notice empty shelves in some stores. Our concerns rise as we are helpless to do much about the issue. Many people point fingers at what they think is the reason for shortages, and they are all correct. 

We soon realize it is a COVID-19, transportation, labor, resource, warehouse and political problem. It is rumored these problems are not to go away for some time, maybe into 2023.

The normal cycle time for a retailer or brand to ship products by sea is around 40 days. Products loaded on a boat in China spends about 30 to 40 days at sea, then waits to dock for one to two days, is unloaded onto trucks, taken to warehouses and finally distributed across the nation. But, these days, the cycle is up to 80 days or longer. I’ve heard if a crew member on a ship comes up with COVID-19, the port will not allow them to unload, so the ship will return to China loaded. 

During the last year, a number of truckers retired – both corporate and self-owned. This has really hurt the trucking industry. For the docks in California, only newer trucks can operate because of emissions standards, and we’ve heard no one is buying new trucks because of potential standards to take place in a few years. 

The California Legislature passed a bill, which is hung up in court right now, and bans independent owner-operators of trucks in-state and those coming into the state. Hopefully the courts will do away with this ban.

Shipping companies are also looking for other ports to dock where a union presence is not too large, but they would have to go through the Panama Canal to reach those in the southeastern U.S. Plus, warehouse space is tight in these alternative docks.

Because of organized labor unions at the Los Angeles and Long Beach docks in California, there are around 70 ships waiting to get unloaded. This number has eased up as they were forced to operate 24/7. The unions refused to expand their work hours and work on weekends. Getting unions to operate 24/7 should have been dealt with months ago. Secretary of Transportation, Pete Buttigieg, has not been working on the issue as hard as he should have been.

All of these issues have created higher costs for the consumer. Cargo costs to ship a big container have increased from around $1,500 in 2017 to about $25,000 today – an increase of 1,000 percent. Just the container ships alone docking in Los Angeles or New Jersey account for around 10 percent of all global trade.

While we feel the impact here in the U.S., this issue is worldwide. Every country feels it. This issue is fixable, but it is going to take time to get there. Some of the regulations and restrictions need to be loosened and politics should stand back. People need to get back to work, and some need to stop pointing the finger at each other and just fix the problem. 

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