What feds can do to aid the supply chains, chaos effects global growth, the scarcity list grows

Monday Morning Wake Up Call

October 18, 2021

What can feds do to aid 24/7 supply chains?

(American Shipper) In his speech on Wednesday announcing commitments made by the Port of Los Angeles and its major retailer customers to expand to 24/7 operations, President Biden emphasized that in order for the changes to work, terminal operators, railroads, trucking companies, container lines and other retailers had to coordinate.

And if players in the supply chain are unable or unwilling to cooperate, “we’re going to call them out and ask them to act,” Biden said, “because our goal is not only to get through this immediate bottleneck, but to address the long-standing weaknesses in our transportation supply chain that this pandemic has exposed. If federal support is needed, I will direct all appropriate action.”

But beyond merely coordinating among the various modes and their customers, what can Biden and the federal government do?

One solution — according to a handful of ports pushing for it — is to tap into a provision within the National Defense Authorization Act called the Maritime Transportation System Emergency Relief Program (MTSERA). The program authorizes the U.S. Maritime Administration to award grants due to emergencies, including the current pandemic. In addition to ports, those eligible for receiving money from the fund include vessel owners and terminal operators. Eligible costs for relief include workforce retention and infrastructure repair.

The American Association of Port Authorities had sought $3.5 billion worth of funding through the program earlier this year for COVID relief. But container ports on both coasts — including the ports of Oakland, Seattle-Tacoma, New York and New Jersey, and Norfolk, Virginia — are now urging the Biden administration to ask Congress for emergency funds through MTSERA to help port authorities fund operations and establish incentives aimed at unclogging the supply chain, according to a letter obtained by FreightWaves.

Some of those include incenting cargo owners, trucking companies and railroads to make use of the extended hours; developing off-site container storage; and encouraging ocean carriers to load and discharge cargo at the contractually agreed-upon ports to avoid vessel bunching in other regions.

Money from MTSERA could also be used to supplement the costs of data-sharing platforms used by the ports and their customers that provide better visibility and predictability of container location and delivery.

Lawmakers, concerned that supply chain backups are already threatening holiday deliveries and boosting consumer prices, are urging government action as well. Speaking on Tuesday at the Port of New York and New Jersey alongside Federal Maritime Commissioner Daniel Maffei, U.S. Reps. Josh Gottheimer, D-N.J. and Daniel Payne, D-N.J., complained about supply chain disruptions causing container rates to skyrocket from $2,000 to $22,000 over the past year.

“Supply and demand are real, but the idea that a container should cost 10 times what it did before COVID is absurd,” Gottheimer said. “We need to fix this shipping crisis now — before the holidays because the last thing we need is a giant piece of coal in America’s Christmas stocking.”

Gottheimer called on Congress and the administration to take several actions, including:

• Congressional Oversight: The House Committees on Transportation and Infrastructure, Ways and Means, and Homeland Security should hold hearings to investigate the continued spike in global shipping prices and potential collusion in the marketplace.

• FMC Action: The Federal Maritime Commission and all relevant authorities must redouble their oversight efforts to investigate the practices of major ocean carriers and assess if there is any collusion or anti-competitive practices.

• U.S. Department of Homeland Security (DHS) Revamp: DHS must modernize how it tracks and clears ship traffic and to get goods moving. Currently, outdated processes are helping contribute to the backlog.

• Ocean Shipping Reform Legislation: Gottheimer is cosponsoring key bipartisan legislation, the Ocean Shipping Reform Act of 2021, to take major steps to mitigate supply chain issues and help ensure that businesses and consumers aren’t facing untenable delays and price increases.

Longer term, the bipartisan infrastructure bill awaiting passage in Congress — which had meager bipartisan support — is also a way to help the country support a 24/7 supply chain, Biden asserted in his speech this week. But Democrats in Congress who complain the bill pays too little attention to funding roads and bridges rejected the idea.

“On infrastructure specifically, the president and the majority are using [supply chain disruption] to advance their socialist agendas instead of concentrating on addressing congestion and freight bottlenecks,” said House Transportation and Infrastructure Committee Ranking Member Sam Graves, R-Mo., following Biden’s speech.

“Americans are paying a heavy price for these failures, including skyrocketing inflation and the growing scarcity of goods on the shelves that will get worse with Christmas fast approaching.”

To Read More: www.freightwaves.com/news/what-can-government-do-to-aid-247-supply-chains

Supply chain chaos is already hitting global growth. And it’s about to get worse

(CNBC) Thanks to the rollout of coronavirus vaccines, the global economy is slowly starting to emerge from the pandemic.

But Covid-19 has left one very destructive economic issue in its wake: Disruption to global supply chains.

The rapid spread of the virus in 2020 prompted widespread shutdowns of industries around the world and, while most of us were in lockdown, there was lower consumer demand and reduced industrial activity.

As lockdowns have lifted, demand has rocketed. And supply chains that were disrupted during the global health crisis are still facing huge challenges and are struggling to bounce back.

This has led to chaos for the manufacturers and distributors of goods who cannot produce or supply as much as they did pre-pandemic for a variety of reasons, including worker shortages and a lack of key components and raw materials.

Different parts of the world have experienced supply chain issues that have been exacerbated for different reasons too. For instance, power shortages in China have affected production in recent months, while in the U.K., Brexit has been a big factor around a shortage of truck drivers. The U.S. is also battling a shortage of truckers, as is Germany, with the former also experiencing a large amount of backlogs at its ports.

Situation ‘will get worse’

Unfortunately, experts like Moody’s Analytics’ Tim Uy say that supply chain problems “will get worse before they get better.”

“As the global economic recovery continues to gather steam, what is increasingly apparent is how it will be stymied by supply-chain disruptions that are now showing up at every corner,” Uy said in a report last Monday.

“Border controls and mobility restrictions, unavailability of a global vaccine pass, and pent-up demand from being stuck at home have combined for a perfect storm where global production will be hampered because deliveries are not made in time, costs and prices will rise, and GDP growth worldwide will not be as robust as a result,” he said.

“Supply will likely play catch up for some time, particularly as there are bottlenecks in every link of the supply chain—labor certainly, as mentioned above, but also containers, shipping, ports, trucks, railroads, air and warehouses.”

Supply chain bottlenecks — congestion and blockages in the production system — have affected a variety of sectors, services and goods ranging from shortages of electronics and autos (with problems exacerbated by the well-known semiconductor chip shortage) to problems in the supplies of meat, medicines and household products.

Amid higher consumer demand for goods that have been in short supply, freight rates for goods coming from China to the U.S. and Europe have soared, while a shortage of truck drivers across both the latter regions has exacerbated the problem of getting goods to their final destinations, and has led to high prices once those products hit store shelves.

The pandemic has only served to highlight how interconnected, and how easily destabilized, global supply chains can be.

At their best, global supply chains lower costs for businesses, due to often lower labor and operating costs linked to the manufacturer of the products they want, and can spur innovation and competition.

But the pandemic has highlighted deep fragilities in these networks, with disruption in one part of the chain having a ripple-down effect on all parts of the chain, from manufacturers to suppliers and distributors with disruptions ultimately affecting consumers and economic growth.

Supply chain crisis hits growth

As economies get back on their feet, the supply chain crisis has come to the fore as one of the biggest challenges governments now face. Covid-weary citizens are eager to spend again but are finding goods either absent or much more expensive.

The issue is now looming large ahead of Christmas too and last week, White House officials warned that Americans could face higher prices and sparser shelves this festive season with the Biden administration trying to alleviate blockages at ports.

China and Europe are also experiencing growth problems on the back of supply chain issues. On Monday, China reported that its third-quarter GDP grew a disappointing 4.9% from the previous quarter, as industrial activity rose less than expected in September (rising by 3.1% below the 4.5% expected by Reuters) — with supply chain issues contributing to the slowdown in activity.

“Manufacturing was hit hard by supply chain disruptions due to Covid as some port operations were hit in the third quarter of 2021, and chip shortages continued in the quarter,” Iris Pang, chief economist of Greater China at ING, noted Monday.

She said that “supply chain disruptions are expected to last as freight rates are still high and chip shortages are still a critical issue for industries like equipment, automobiles and telecommunication devices.”

Last week, Germany’s top economists warned that “supply bottlenecks will continue to weigh on manufacturing production for the time being” and were likely to hamper growth in export-oriented Germany, Europe’s biggest economy.

Earnings impacted

Experts note that earnings are already starting to show the impact of the supply chain crisis. Invesco’s Global Market Strategist Kristina Hooper noted last week that “supply chain fears are brewing″ with a number of U.S. companies flagging up warnings about rising costs related to supply chain disruptions and potentially lower earnings.

Hooper believed some of the factors contributing to supply chain issues, such as the labor shortage, will be worked out sooner than others. But she said the problem could have longer-lasting effects on some sectors.

“No matter where companies are, they are likely experiencing supply chain disruptions, higher input costs and some issues sourcing labor,” she said in a note last Thursday.

“However, some companies will be far more impacted than others ... A rise in cost will generally have the greatest impact on low-margin companies, which tend to be found in sectors such as transportation, general retail, construction and autos. Companies that should be least impacted are those with wide profit margins, limited raw material costs and small workforces. That should include growth sectors such as tech and health care,” she said, adding that “unfortunately, those sectors’ stock prices may temporarily suffer as bond yields rise.”

“Financials may be the standouts in this environment, especially as these companies would welcome higher yields. Another differentiating factor may be how much investment companies have made in technology to increase productivity.”

Hooper noted that some shortages, of semiconductors in particular, could improve soon, with projections for a return to normal levels of production by the second quarter of 2022. “However, more general supply chain disruptions are likely to continue in the shorter term, especially if there are additional Covid waves,” she added.

“In general, supply chain disruptions and higher input costs seem likely to be relatively transitory ... And so, for me, I’ll be paying close attention to this quarter’s earnings season, but I’ll be most concerned about companies’ guidance for the fourth quarter and beyond — especially how long they expect these conditions to last,” she said.

To Read More: www.cnbc.com/2021/10/18/supply-chain-chaos-is-hitting-global-growth-and-could-get-worse.html

Grocery store shelves bare? These products may be hard to find due to supply chain issues

(Yahoo Finance) Can't find what you need at the store again? You're not alone.

As the world reaches the two-year mark of the COVID-19 pandemic, more items are becoming scarce because of a supply chain shortage across the globe.

Supply chain concerns are due to “record-level congestion at the Port of Los Angeles/Long Beach that has spread to the East Coast, the widespread power outages across China, shortages of truck drivers and service workers, and COVID-19-fueled infections and restrictions,” Tinglong Dai, a business professor at Johns Hopkins University, told USA TODAY in an email.

Shipping prices have skyrocketed, and the demand for items has outpaced the suppliers.

Before making a grocery list, here is a list of items you might not find:

Ben & Jerry flavors

This frozen treat is usually the perfect dessert, but in an email on Sept. 14, Ben & Jerry's parent company Unilever cited labor shortages as the reason for reducing the amount of flavors produced. The company said it will focus on producing its most popular flavors. Phish Food lovers, you have nothing to worry about.

Carbonated drinks

Fertilizer plants, which lead to the production of carbon dioxide, had to reduce their output due to rising costs, causing shortages in food and other products, Per Hong, senior partner at consulting firm Kearney, said to CNBC. “We almost certainly will be faced with a global shortage of CO2 that is used widely. CO2 is used extensively in the food value chain from inside packaged food to keep it fresher longer, for dry ice to keep frozen food cold during delivery, to giving carbonated beverages their bubbles,” he said.

Chicken

People have substituted fast food for home-cooked, comfort meals causing chicken to become scarce. In May, suppliers announced a shortage of chicken limiting some restaurants' menu items and increasing the price in stores.

Coffee

Brazil is a supplier of most of the world's coffee, but the country has been experiencing a drought that slowed the production and transportation of coffee beans.

Diapers

Households with small children should be aware that diaper prices have increased due to raw material price raises, shipping delays and container shortages, according to Business Insider. Diaper manufacturers, Proctor & Gamble (Pampers and Luvs) and Kimberly-Clark (Huggies) announced price increases in early April.

Fish sticks

A customs dispute at the U.S.-Canada border has kept the Alaska pollock, used for fish sticks and sandwiches, stored across the border. Cross-border violations have halted the transportation of the fish and may cause permanent seafood supply chain issues.

Frozen Meals

Rodney Holcomb, food economist at Oklahoma State University, explained to ABC27 News that concerns over the delta variant have some customers buying more than usual, as we saw at the beginning of the pandemic, just in case there is another lockdown.

Heinz ketchup packets

With restrictions on indoor dining, most people switched to pickup, takeout and delivery orders, limiting the supply of individual ketchup packets. Kraft Heinz confirmed to USA TODAY in early April that it is working to increase supplies, such as adding manufacturing lines that will increase production by about 25% for a total of more than 12 billion packets a year.

Marie Callender’s pot pies

The holidays call for comfort foods – even if you aren't the one making it. But expect shortages of Marie Callender's 10-ounce and 15-ounce pot pies. According to parent company Conagra, it would be allocating shipments through Nov. 29 after it "encountered packing material challenges from our tray and carton supplier resulting in a production interruption," CNN Business reports.

McCormick Gourmet spices

With the holidays around the corner, meals being prepared across the nation may be missing a very important ingredient – seasonings. McCormick Gourmet spices are short of packaging supplies due to pandemic-related shutdowns. Lori Robinson, a spokesperson for McCormick, told CNN Business, "Gourmet is the only product line impacted by this packaging shortage," but can be substituted with their regular spices.

Rice Krispie Treats

This lunchbox treat's production has been "below service expectations," as stated in an email sent to suppliers. The shortage persists as Kellogg's workers remain on strike, even though production lines have restarted as replacement workers were brought in.

Sour Patch Kids

In an Oct. 1 email to a grocery distributor, parent company Mondelez says there is "limited availability" on some of their items such as Sour Patch Kids, Swedish Fish candy, and Toblerone chocolate "due to supply chain constraints."

Toilet paper

This is something that isn't new to the pandemic shortage list, but the industry has yet to keep up with the demand. The toilet paper shortage stems from lumber's raw material, wood pulp, which is used to make toilet paper. Fox Business reports only 60% of orders are being shipped out. Some retailers, such as Costco, have reinstated purchasing limits to preserve this household item.

To Read More: finance.yahoo.com/news/grocery-store-shelves-bare-products-173151608.html

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