There are lots of reports out with tidbits of information which combine to paint a picture that the tangled supply chain is not going to untangle anytime soon. For your consideration:
- New system to allow cargo ships to register a scheduled arrival time will make it look like the number of ships waiting to unload has decreased.
- Big increase in the number of people who started their own business since start of the pandemic, becoming self-employed.
- Your favorite restaurant may stop taking delivery orders during crunch time.
- Pay and working conditions for truckers are horrible – no wonder there aren’t enough of them.
FreightWaves – 12/1/21 – Ships in California logjam now stuck off Mexico, Taiwan and Japan – You may have heard the number of ships parked off the coast of ports in Southern California has dropped recently.
Good news, right?
Well, not so fast.
Turns out they are parked further off shore, or they may even be parked off Taiwan or Japan yet still be part of the backlog in Los Angeles and Long Beach.
Couple of developments explain this.
First, there is something called a “Safety and Air Quality Area” outside the ports which extends 150 miles to the west and 50 miles to the north and 50 miles to the south. There are safety and air quality reasons to hold down the number of ships that close to the ports.
Second, a new system has been set up to let ships get in line for a spot at the port.
Previously a ship could get a slot only when it arrived within 20 miles of the port. Thus you had to get right off the coast, join the huge crowd, and park in the SAQA before getting in line to unload.
The new system will let ships register their calculated time of arrival (CTA) and therefore get in line to unload based on a theoretical calculation of when they will arrive based on the time they left their last port. This means as soon as you pull out of port in Hong Kong, Taiwan, or Japan, you can calculate and file for a CTA.
Since that will be further in the future than the actual sailing time a ship’s captain could take several approaches. The ship could cruise at a very slow, efficient speed and still arrive in advance of CTA. A ship could park 200 or 300 miles offshore. Or the captain could hang out just off the shore of Taiwan or Japan, only heading out in time to make the CTA.
As a result, the number of ships within the SAQA is dropping fast even though the number of ships waiting to unload in Los Angeles and Long Beach is not dropping.
Wall Street Journal – 11/29/21 – Workers Quit Jobs in Droves to Become Their Own Bosses – One more small reason there is severe disruption in the employment market (and the entire supply chain) is about half a million people have left paid work to become self-employed. The Labor Department shows there are about 9.44 million unincorporated self-employed workers today compared to the start of the pandemic, which means there is a whopping 6% increase in the count of self-employed people.
Another indicator is there were 5.45 million applications for federal tax identification numbers for January through October 2021, which is a 56% increase from same time in 2019. That is half again more people starting their own company. The estimate is two thirds of those are for one person shops, meaning they are not expected to hire any employees.
Article suggests several possibilities for the flood of newly self-employed. People are:
- seeking flexibility,
- worried about catching Covid,
- upset with mandatory vaccination, or
- disenchanted with the cubical life.
Having been self-employed for one month short of 20 years I say:
To anyone else who has those concerns mentioned above I say: It is astoundingly easy to start your own company and it is so rewarding for so many reasons.
Wall Street Journal – 11/28/21 – Your Favorite Restaurant Might Be Taking Delivery Off the Menu – Restaurants are starting to cut back on the amount of online and delivery orders they will accept. At crunch times they will let go of the lower margin delivery orders in order to concentrate on providing high quality service and timely food to in-person patrons.
Restaurants mentioned that are starting to do this include the Darden restaurant chain (think Olive Garden), Cheesecake Factory, and First Watch Restaurant Group (400 restaurants in their chain).
Staffing shortages are the issue.
NBC News – 11/22/21 – Poor conditions and low pay for truckers helped fuel supply chain crisis – Yet one more reason for the supply chain disruption is most truckers are independent contractors. That means they get paid per load, not per hour. That means if there’s a delay, either in unloading a ship, or finding a specific container, or finding a chassis, or getting trucks into the port, or getting trucks checked out of the port, the burden falls on the trucker. It doesn’t matter one bit to the port, the shippers, or customers whether it takes two hours or five hours to pick up a container. The trucker takes it in the shorts.
Guess what? That means truckers shy away from that work.
Another burden on truckers is the cost of new trucks is skyrocketing, according to the article. Prices on used trucks are going up. One dealer says in spite of the rising prices he can’t keep any trucks on his lot.
Also keep in mind those independent truckers responsible for their own maintenance and fuel.
No wonder there aren’t enough trucks at the docks.