Supply chain disruptions not getting better anytime soon.

Cargo container on chassis pulled by big rig truck. Image courtesy of Adobe Stock.

String of articles are pointing at disruptions in the supply chain continuing well into 2022 or possibly 2023.

A few of said articles discussed below:

  • Tally of ships off the Long Beach and Los Angeles ports rises to record of 111.
  • Experienced truck driver describes how every step of the trucking part of the supply chain is tangled up, from extra wait getting into the port all the way to several hours waiting to drop cargo at warehouses.
  • Disruption of chip supply expected to last until sometime in 2023.

Do please keep in mind this is due to the hubris of government officials thinking an economy can be turned off and on light a light switch and also flooding the economy with several trillion dollars without any corresponding increase in output.

Washington Free Beacon – 11/10/21 – Record Number of Ships Stranded Outside California Ports – Article sites Business Insider as saying there are 111 ships waiting to unload at Los Angeles and Long Beach ports as of 11/9/21. This backlog is new high from previous record of 108 ships on 10/21/21.

The $100 per day fine for each container that is sitting too long on the dock awaiting shipment will begin soon. The clock started on 11/1/21.

Article says there are at least 60,000 containers which would generate fines to the owning companies.

The backlog of containers off the coast is increasing.

Medium – 10/26/21 – I’m A 20 Year Truck Driver, I Will Tell You Why America’s “Shipping Crisis” Will Not End – Depressing article explains that every step of the supply chain is overloaded, with increasing delays, understaffed, with minimal ability to expand capacity. Every step.

For lots of reasons, most trucking companies will not touch shipping containers.

He draws an analogy of getting an offloaded container to visiting Walmart on Black Friday. The difference is there are three massive lines to get through, with essentially one cashier per thousand customers. There are only five or 10 gates for the hundreds upon hundreds of trucks to get into the port. There is a long wait to get a chassis (an hour or two) with another wait for the port staff to find your specific container. Add another long wait to get out of the port. He says each of those lines will take a minimum of an hour.

He says it is the same condition at every port. The inland ports (where those mile-long trains unload somewhere inside the country) and seaports are the same. He does not distinguish between Long Beach and Los Angeles compared to every other seaport in the country

Most truckers are independent contractors. The author is a Teamsters member, which means he gets paid by the hour (an extra one or three hours wait at each of those three lines in a port translates into extra pay with much of it at overtime rates). Those independent contractors get paid per load. That means they get the same whether it takes three hours to get in and out of a port or it takes 12 hours.

He says most independent truck drivers took a pay cut of something in the range of two-thirds when the pandemic kicked in. How would you like to take a one half or two thirds cut in pay when your workday has increased to 12 or 14 hours at the same time? As a result, he says most independent truckers stopped showing up.

This past summer two major railroads (BNSF and Union Pacific) shut their Chicago yards to inbound containers. They had multiple miles of containers lined up outside the inland ports waiting to get into port.

Then there are the chassis. That is a trailer carrying the container. Those are now being used as storage since the ports are full of containers waiting to get picked up. That means it’s hard to find a chassis to load a container.

Then there is the wait at the warehouse to drop the container. There is an extra couple of hours to drop a container and pick up an empty because warehouses are understaffed. In addition to the general labor shortage, warehouse work is physically demanding and it usually only pays minimum wage.

His experience is the drop-off and pickup at a warehouse took 20 or 30 minutes before the pandemic. It now takes three or four hours.

Costs are going up at every step of the supply chain.

Delivery speed is going down at every step of the supply chain.

He predicts this will result in rapidly increasing prices for retailers which will work its way through to consumers. He also predicts shipping times will slow down further. Unless you pay for premium shipping, which will move your package to the front of the line.

Wall Street Journal – 10/29/21 – Global Chip Shortage “Is Far From Over” as Wait Times Get Longer – One small manufacturer reports an order for chips, which are critical to its products, has been delayed three times with delivery expected in late spring 2022. A company that helps manufacturers source chips says their clients are getting delivery dates in 2024.

One analyst group tracks the average shipping time for chips. A healthy level is an average in the range of nine or 12 weeks. This summer the average delivery stretched 19 weeks. In October average shipping is 22 weeks, with 38 week delay for specialized chips needed in the auto industry.

An analyst at Wells Fargo expects shortage will last into 2023. The group has dropped their estimate of GDP growth from 7% to 6.3%, all because of crunch and supply of chips. Article does not say if that is an estimate of 2021 or 2022.

Article cites problems in all steps in the supply chain:

  • basic raw materials are in short supply,
  • production has been disrupted by bad weather and fires,
  • final manufacturing has been “affected by” turmoil,
  • disruption in shipping has tangled up transportation, and finally,
  • anyone who can get chips is moving towards stockpiling them, which compounds the shortage.

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