The Biden administration is making efforts to open up ports and unkink the supply chain through a combination of public works and private partnerships. The efforts will center around moving toward 24/7 operations at the Ports of Los Angeles and Long Beach, which together account for 40% of the containers unloaded in the U.S.
The additional work hours will include new off-peak nighttime shifts and weekend hours for dock workers, which will nearly double the available hours for moving cargo out of the Port of Los Angeles. The International Longshore and Warehouse Union has announced that its members are willing to work the extra shifts, which will add capacity and help clear existing backlogs.
Unloaded goods still need to be moved further along the supply chain at an accelerated pace to fully clear the backlog, and this is where the private sector will come into play. Retailers that have committed to helping overcome the supply crunch include:
- Walmart, which committed to increasing its nighttime hours significantly and projects that it could increase throughput by as much as 50% in coming weeks;
- Target, which is currently moving approximately 50% of its containers at night and will increase that amount by 10% during the next three months to help ease congestion at the ports; and
- The Home Depot, which will move up to 10% more containers per week during the off-peak port hours.
Other retail-adjacent companies contributing to the effort include:
- Samsung, which has committed to moving nearly 60% more containers out of the affected ports by operating 24/7 during the next 90 days;
- UPS, which will increase use of 24/7 operations and enhance data sharing with the ports, which could allow it to move up to 20% more containers; and
- FedEx, which will combine an increase in nighttime hours with changes to trucking and rail use to increase the volume of containers it will move from the ports, potentially doubling the volume of cargo it can move out of the ports during these shifts.
Together, the night operations of these six companies will move more than 3,500 additional containers per week through the end of the year.
The National Retail Federation (NRF) praised the efforts to jumpstart the supply chain, noting that it has been urging the government to allocate more resources to addressing supply chain failures for some time, and hopes the current partnerships will result in long-term sustainable solutions.
“It is critically important that we all come together — business, labor and government — to address the current issue regarding port congestion, and the long-term need to create a more reliable supply chain globally and within the U.S.,” said Matthew Shay, President and CEO of the NRF in a statement. “The retail industry greatly appreciates President Biden’s personal commitment to marshal the power of the federal government behind efforts to reduce the disruptions our members are currently facing, and retailers remain committed to working with all stakeholders to ensure consumers have access to the products and services they want and expect.”
Even if the U.S. manages to clear out its ports, however, the country will still be facing supply chain disruptions on a global scale. In its latest World Economic Outlook, the International Monetary Fund (IMF) lowered its GDP growth projection for 2021 from 6% to 5.9%. The global growth projection for 2022 remained at 4.9%.
The IMF expects COVID-related disruptions to continue impacting low-income countries in the coming year, which will affect any items produced in these areas. While 60% of the population in advanced economies is fully vaccinated, approximately 96% of the population in low-income countries is still unvaccinated. Achieving full supply chain recovery will take an international effort.
“Looking ahead, vaccine manufacturers and high-income countries should support the expansion of regional production of COVID-19 vaccines in developing countries through financing and technology transfers,” said Gita Gopinath, Economic Counsellor and Director of the Research Department at the International Monetary Fund in a blog post.