The delivery bottlenecks become Biden’s big problem

Container ships in the port of Los Angeles

The ships are stuck in a traffic jam, the containers are stacked up. This shows the delivery crisis in the major US ports.

(Photo: Reuters)

Washington The picture has been the same in southern California for weeks: dozens of freighters are stowed in the two largest ports on the US west coast. Containers are stacked on top of containers, nothing is moving forward. A cargo ship currently has to wait an average of eleven days in the port of Los Angeles. Before that, there is usually no chance that the goods will be unloaded and transported on.

On Thursday night, US President Joe Biden took unusual measures to resolve this. “Traditionally, our ports are only open during the week, Monday through Friday, and are usually closed at night and on weekends,” said Biden. After negotiations by his government with trade unions, operators and freight forwarders, this is now changing. “By opening seven days a week, at night and on weekends, the Port of Los Angeles will be open for more than 60 additional hours a week.”

The mass blockade and the intervention of the president are symptoms of the global supply chain crisis, which is also becoming more and more noticeable in the USA. The tense situation is becoming a serious problem for the world’s largest growth engine: just this week, the International Monetary Fund (IMF) lowered its growth forecast for the USA by one percentage point – more than any other G7 country.

Although the economy is still expected to grow by an impressive six percentage points this year, the IMF counts “disruptions in supply chains and a weaker consumer climate” as one of the greatest risk factors.

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“The goods do not move by themselves,” warned US President Joe Biden. In addition to the round-the-clock opening of the port in LA, he also called for more commitment from private companies. “We have to get them to their destination faster and more reliably.” A handful of large department stores, including Target and Home Depot, agreed to increase working hours and staff.

“But that can only be a first step,” urged Biden and started an appeal for personal initiative. “As many as possible from the private sector must follow this example.”

The long-term effects of the pandemic can be felt in everyday life

The supply chain crisis overshadows his first year in office. The upswing’s message of success wore off quickly: Since the summer, Biden’s popularity ratings have fallen from just under 53 to 45 percent. There are many reasons for this, from the chaotic Afghanistan withdrawal to the spread of the delta variant of the coronavirus. But the long-term effects of the pandemic have a concrete impact on the everyday lives of millions of Americans: in the form of long delivery times, inflation and empty shelves.

Biden is in a dilemma. Because he can only partially counteract this with his own initiatives. After all, the supply chain crisis is a global phenomenon.

Joe Biden

The US president has recently lost a lot of popularity. The problems in the country are too great.

(Photo: AP)

The US President is struggling with a complex situation in which three points are decisive:

  • A blessing becomes a curse: The White House admitted this week that the $ 1.9 trillion Covid emergency aid, including cashier’s checks, was not only helpful. It was, among other things, this mega-stimulus that pepped up the US economy at record speed. But the supply, throttled worldwide by the delta and production stops, cannot keep up with the demand of US consumers. American consumers want to buy, buy, buy: exercise bikes, laptops, toys, garden furniture. The White House diagnosed an “enormous demand for goods of all kinds” and imports had risen by 18 percent. But bottlenecks have long ceased to be a temporary phenomenon, but rather a permanent condition, as the example of the chip crisis shows. Just this week, the financial data service Bloomberg announced that Apple would have to cut its production targets for the new iPhone 13.

  • The logistics are a disaster: The fruits of economic recovery collide with the reality of infrastructure. Companies struggle with long waiting times and skyrocketing prices. According to stock exchange broadcaster CNBC, a container trip from China to California costs $ 20,000. A year ago it was $ 3,000. As a first emergency measure, Biden now made sure that the port of Los Angeles goes into round-the-clock operation. Together with Long Beach, the port handles 40 percent of all container imports from the USA. At the same time, the largest freight forwarders Walmart, Fedex and UPS committed to work around the clock. However, one main problem is likely to be slow to resolve: there are not enough staff for ports, train stations or warehouses. The labor shortage is making itself felt in the truck industry. Tens of thousands of drivers are missing.

  • Empty shelves and high prices: Americans, who are spoiled for consumption, have a new experience: They sometimes wait weeks for clothes, toys and electronics, even everyday products such as diapers are in short supply. At the wholesaler Costco, toilet paper, water bottles and cleaning products have recently been rationed again – just like in the early days of the pandemic. Large retailers such as Home Depot and Target are now chartering their own ships in order to be able to deliver goods in time for the Christmas season. At the same time, inflation is at its highest level in a decade. Consumers pay extra for food and energy in particular. Within a year, prices rose 5.4 percent, new figures from the US government show.

Analysts believe that many of these problems could last until the end of next year, or even 2023. The supply chain crisis will “get worse before it gets better,” warned Moody’s Analytics this week. “There are interruptions in the supply chains at every turn, which is hindering the global economic recovery,” the experts said.

Trade war with China is an additional threat

The longer the crisis lasts, the more Biden comes under pressure. Domestic political successes have become rare: the president has been fighting for an infrastructure package for months. But his own party is blocking the reform in Congress. In addition, it was his administration, especially US Treasury Secretary Janet Yellen, that dampened inflation worries after the stimulus in the spring. Biden emphasized at the time that higher prices were only a temporary phenomenon.

Even the IMF now assumes that the problems will not resolve anytime soon. Because the cause of the bottlenecks, the pandemic, has by no means been tackled: the stubborn delta variant throws previous forecasts upside down, and vaccines are still unevenly distributed between industrialized nations and poorer countries.

Biden also experiences headwinds from the economy. He is pursuing a tough protectionist course – to the displeasure of many industries. The US government announced last week that it would maintain the punitive tariffs against China for the time being. The largest associations from the manufacturing industry responded with several fire letters. The supply chain crisis will be “exacerbated” by the punitive tariffs, it is said in a letter, the trade war “damages the competitiveness of US manufacturers and slows down the recovery of the US economy”.

More: IMF chief economist Gita Gopinath in an interview – “Germany faces major challenges”

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