Transportation problems at U.S. ports may continue until 2022

Thousands of containers have been unloaded from ships in the Port of Los Angeles and Long Beach, waiting for dozens of large container ships to be unloaded offshore on Wednesday, October 13, 2021.

Allen J. Shaven | Los Angeles Times | Getty Images

According to economists and some business leaders we talked about recently, transportation backups at large US ports and the resulting shortages of goods and rising prices are unlikely to be resolved by 2022.

According to Goldman Sachs, about 77 ships are waiting outside the docks in Los Angeles, California and Long Beach, carrying $ 24 billion worth of goods looking for a way to the American ecosystem. increase.

Pressure is affecting the economy, imposing constraints on everything from grocery stores to major manufacturers. Prices for consumer goods and wholesale goods are skyrocketing.Trends are expected to be created Inflation holiday season There may be fewer items under the Christmas tree.

Those looking for good shipping news right away are unlikely to receive it.

Goldman economist Lonnie Walker said in a note to customers, “Backlogs and rising transportation costs will rise at least mid-next year as there is no immediate solution to the underlying supply-demand imbalance in US ports. It is likely to continue until. “

Eventually relief may arrive. The pressure “should begin to ease soon,” but “just past the peak of ongoing seasonal shipping demand prior to the holiday season,” Walker added. After holidays and Chinese New Year, container traffic will be reduced, which should alleviate the problem.

in the meantime, Consumers will pay more There is less access.

Transporting containers via major US ports takes three times as long as usual. According to Goldman Sachs, about one-third of the containers at LA and Long Beach ports shipped more than five days ago in September. Unloaded containers decreased by 9.1% in Long Beach and 3.6% in Los Angeles.

President Joe Biden Tried to fix the problem Order to keep the port open for 24 hoursBut it only helped in the margins. The ongoing labor shortage and lack of coordination among multiple players in the US supply chain have slowed the impact of the move.

“As a result, the underlying supply-demand imbalance in US ports will not be immediately correctable,” Walker said.

“Congestion could continue to some extent until at least mid-next year, and analysts expect fares to be well above pre-pandemic levels, at least next year,” he said, although some easing is expected in the future. I have. ” “”

Challenges for large companies

Companies had to find a way to keep their products running in the turmoil of the supply chain.

This issue has been repeatedly mentioned during the third quarter earnings season. Many officials say they have been hit by delayed shipments, but they are developing various strategies to mitigate the damage.

Konagra CEO Sean Connolly said his company is struggling to keep up with the surge in consumer demand.

“This is a big problem, but as the industry addresses labor shortages, material supply issues, transportation costs, and congestion issues, supply chain demand increases,” said a packaged food company manager. Stated. Revenue will be called a few weeks ago. “If we had the ability to meet all the demands, our numbers would have been even more impressive.”

“Supply chain challenges will eventually ease,” Connolly added.

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Consumer product giant Procter & Gamble “We are also under pressure from tight labor markets, tight transportation markets, and overall capacity constraints. Inflationary pressures are widespread,” said Andre Schulten, chief financial officer, in a statement on October 12. It has reached and is persistent. “

“We feel good,” Schulten said at P & G about his ability to manage problems.

Ultimately, the problems faced by businesses and consumers arise primarily from problems related to the Covid-19 pandemic. Consumers are shifting their spending from services such as restaurants and travel to products such as household goods and technology.

The United States has relied on a “just-in-time” supply chain that has not been built to respond to the impact of large-scale demand.

“Changes in the inputs to a particular type of system (in this case, global demand for goods) can result in significantly greater changes in output. Systems with fundamental chaotic characteristics , It can change from a calm state to a chaotic state very quickly without warning. Signs. ” Ian Shepherdson of Pantheon Macroeconomics wrote.

Still, Shepherdson hopes that the pendulum will return to a more service-based economy, allowing supply to keep up with demand.Federal Reserve Staff I’m also betting on the result.. They decided to oppose raising interest rates to stop inflation, hoping that the economy would soon return to equilibrium.

Federal Reserve Board Jerome Powell Inflation lasted longer than expected and is likely to continue next year, he said on Friday. But he added that it has not risen to a level that justifies substantive policy tightening.

Shepherdson said a drop in demand could lead to “a period of sharp declines in commodity prices,” but added that “I was surprised to see it by mid-next year.”

Transportation problems at U.S. ports may continue until 2022

Source link Transportation problems at U.S. ports may continue until 2022

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