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Why have American ports become synonymous with 'cargo stagnation'?
The global supply chain has suffered an unprecedented impact in 2021, the roots of which can be traced to the outbreak of the COVID-19 epidemic and the subsequent war in Ukraine. These events have sharply reduced the efficiency of cargo transportation and led to global material shortages. As shopping demand in the United States surges during the holiday season, problems around ports have become increasingly apparent. Traffic paralysis has made large American ports synonymous with "cargo suspension."
During the epidemic, workers’ absence due to illness and government restrictions have resulted in serious shortages of manpower at the port.
Since the beginning of 2020, the COVID-19 epidemic has brought the global supply chain to a standstill. Manufacturers temporarily suspended operations in the early stages of the epidemic to ensure safety. However, even after the vaccination rate increases, global trade has still not been able to fully recover. As the epidemic continues, especially the spread of the Delta variant virus and the difficulty in obtaining vaccines in developing countries, the recovery of production has become even worse.
One of the core of supply chain issues is the implementation of the concept of "lean manufacturing", an approach that relies on the precise matching between product raw material inputs and finished product outputs to minimize warehousing costs. However, this model is extremely sensitive to demand fluctuations and lacks flexibility. As market demand surged due to the epidemic, many companies that adopted lean manufacturing were unable to cope with the resulting rebound in demand, eventually forming a huge backlog of goods.
When demand surged, these production facilities were unable to keep up, leading to huge backlogs.
By mid-2021, major ports in the United States, such as the Port of Los Angeles, began to receive a historic large number of inbound cargoes. However, the operating manpower at the ports was stretched, and the number of days that container ships were detained outside the port was gradually lengthening. This situation further affected railways and trucks. transportation. The U.S. trucking industry was already facing a driver shortage before the epidemic, and this supply chain crisis has made the situation worse.
Although there are enough containers around the world to support transportation, there is still a serious shortage of containers due to misplacement or loss during transportation.
Large American retailers rented container ships in advance in early 2021 to cope with the peak demand during the holidays. However, amid the increasing demand for shopping during the holiday season, there are still no signs of improvement in the efficiency of transportation companies. According to reports, especially in October 2021, online shopping consumers encountered more than 2 billion out-of-stock messages, double the number in the same period in 2020, showing deep hidden dangers in the supply chain.
The crisis has in part deepened the trade imbalance between the United States and China. In 2021, the trade balance between China and the United States will increase to US$335.5 billion. China's exports have mushroomed in global markets, with production rapidly expanding to cope with sudden global demand. However, this has also led to shortages of many commodities such as infant formula, sanitary napkins and medicines in the United States.
Looking ahead, corporate executives predict that the shortage of semiconductor chips may last until the first half of 2022, especially in the automotive and electronics fields. According to reports, sales of light vehicles in India have dropped by about 20% due to a shortage of chips. The affected areas are not limited to the United States, but many developing countries have also been affected.
Disruption of global supply chains, especially in regions where democracy and human rights are challenged, will lead to increased economic inequality.
In addition, the impact of the Russia-Ukraine war has also put the global supply chain facing a major test, especially in the export of agricultural products and raw materials. As global inflation rises, many countries are facing policy revisions and challenges in responding to supply chain crises. The global inflation rate was forecast to reach 4% to 5% in 2021, but it has now exceeded expectations, reaching a maximum of 8%.
In this whirlpool, U.S. ports continue to become a symbol of "cargo suspension". What problems does this phenomenon reflect in the global economic system?
