Supply Chain Issues Challenge Fuel Retailers

Reuters recently reported that despite President Biden's efforts to ease supply shortages and tame rising prices in time for Christmas, the nation's (and world's) supply chain issues are unlikely to be resolved by the holiday season. 

President Biden has brought together powerbrokers from ports, unions, and businesses to address shipping, labor and warehousing pain in the U.S. supply chain, and announced new around-the-clock port operations in Los Angeles. This port opening, as well as a promise from retailers such as Target and Walmart to move more goods at night are a meaningful first step.

Nevertheless, "while more cooperation among the often competing, secretive players in the U.S. supply chain business is a plus, the White House's impact may be incremental at best, logistics experts, economists and labor unions warned."

Although the Teamsters are saying that the shortage of port truck drivers due to insufficient wages is contributing to the supply chain backlog, "there is no evidence that experienced workers are sitting on the sidelines, U.S. transportation and warehousing are employing more people now than they did before the pandemic started, data from the Bureau of Labor Statistics show."

An in-depth analysis of the Port of Savannah concludes that "as major ports contend with a staggering pileup of cargo, what once seemed like a temporary phenomenon, a traffic jam that would eventually dissipate, is increasingly viewed as a new reality that could require a substantial refashioning of the world's shipping infrastructure."  On the surface, the upheaval appears to be a series of intertwined product shortages.  "Because shipping containers are in short supply in China, factories that depend on Chinese-made parts and chemicals in the rest of the world have had to limit production. But the situation at the port of Savannah attests to a more complicated and insidious series of overlapping problems.  It is not merely that goods are scarce. It is that products are stuck in the wrong places, and separated from where they are supposed to be by stubborn and constantly shifting barriers. The shortage of finished goods at retailers represents the flip side of the containers stacked on ships marooned at sea and massed on the riverbanks.  The pileup in warehouses is itself a reflection of shortages of truck drivers needed to carry goods to their next destinations." And "bottlenecks have a way of causing more bottlenecks. As many companies have ordered extra and earlier...warehouses have become jammed. So containers have piled up at the Port of Savannah."

Part of the problem is a global economy that is out of sync on the pandemic, restrictions, and recovery, the WSJ reports. "Factories and retailers in Western economies that have largely emerged from lockdowns are eager for finished products, raw materials and components from longtime suppliers in Asia and elsewhere.  But many countries in Asia are still in the throes of lockdowns and other coronavirus-related restrictions, constricting their ability to meet demand. 

Warehouse jobs were supposed to be the future of the retail industry, the Washington Post reported recently, but the industry is facing an unexpected problem: Far too few people are willing to take on the often-grueling work. "It is the latest sign that the job market is being buffeted by unexpected trends that are leading workers to reconsider the types of positions they want, upending industries across the economy." The warehouse and transportation industry had a record 490,000 openings in July, a gap that experts predict will widen in coming months. 

An energy crisis around the world is hitting households and manufacturers that were already struggling to recover from the global pandemic, Axios reports. A combination of weather-related issues, unexpected demand and planned outages has sent natural gas and coal prices skyrocketing. "China's energy shortage has already caused high-tech manufacturing centers to close their doors. India is in even worse shape, with much less ability to bring new power sources online. In the U.K., the surge in natural gas prices saw many companies go bust."

The Washington Post reported recently that the restaurant industry is concerned that colder winter weather (thus fewer outdoor dining options) combined with labor and supply chain problems will make for a difficult business environment in the months ahead. "With so many restaurant workers pivoting to other industries perceived as less stressful, restaurant owners have had to offer higher salaries, signing bonuses and other perks to entice potential workers.  This all requires more money. Early in the pandemic, the federal government helped the industry with two rounds of Paycheck Protection Program loans that were forgivable for eligible restaurant owners. [T]here has been no mention of further assistance to the restaurant industry in the infrastructure and reconciliation packages currently being considered in Congress."

​The anemic September employment report, with only 194,000 jobs added, signals deep labor market problems: America's unemployed are still struggling with child-care and health issues, and they are reluctant to return to jobs they see as unsafe or undercompensated, the Washington Post reported. 309,000 women over age 20 dropped out of the labor force in September, while 182,000 men joined the labor force.