A White House task force formed over the summer to alleviate supply chain constraints announced several initiatives Wednesday that would keep key West Coast ports open longer to encourage blue-chip retailers including Walmart, Target and Home Depot to ship more product through those points of entry.
The Supply Chain Disruptions task force made the announcement ahead of a meeting between US President Joe Biden and several business and union leaders taking place at the White House Wednesday.
To help with shipping congestions, the Port of Los Angeles is expanding to a 24/7 operation, nearly doubling the hours that cargo will be able to move out of its docks and on highways, the White House said. This announcement follows on from the Port of Long Beach, California expanding its operations in mid-September.
Private business partnerships
Congestion at these key ports has caused major retailers to divert shipments to other locations to avoid the bottlenecks.
For example, Target said in a blog post last month that it directs the ships it charters to steer clear of particularly backed-up ports. Indeed imports through the ports of Seattle and Tacoma are up 40.6% over 2019 figures and imports through East Coast ports are up 36.1% over that same period, according to the supply chain research unit of S&P Global Market Intelligence called Panjiva.
With the Long Beach and Los Angeles ports now open 24/7, Walmart has agreed to increase its use of night-time hours by as much as 50%, Samsung will move 60% more of its containers through these ports, Home Depot committed to shipping 10% additional containers per week through the ports, and while Target is already moving 50% of its containers at night the company has committed to increasing that amount by 10%.
By moving goods during off-peak hours, the White House said products can exit the ports faster. For example, the Port of LA moves goods 25% faster at night than it does during the day.
“These commitments will help unlock capacity in the rest of the system – including highways, railroads and warehouses – by reducing congestion during the day,” the White House said in its press release.
Partnering with shipping companies
To get shipments from the ports to their final destination faster, UPS and FedEx also committed to improved night-time operations.
UPS said it will take advantage of the new 24/7 operations and enhanced data sharing with the ports to increase the number of containers moved from the ports by 20%. Likewise, FedEx committed to increase night-time hours, which could double the volume of cargo they move out of the ports at night.
Across all six companies partnering with the White House, more than 3,500 additional containers per week will move at night through the end of the year.
Other supply issues
Of course, it is not just clogged ports causing supply bottlenecks.
Retailers are struggling with factory closures abroad from Covid-19 outbreaks and sourcing the needed materials for production. Not to mention, the White House’s initiatives don’t address congestion at overseas ports.
Apple, the world’s largest technology company, is expected to reduce iPhone 13 production by 10 million units through the end of the year due to issues sourcing chips.
Atlanta Fed President Raphael Bostic said during a speech this week that price pressures were expanding beyond the pandemic-impacted sectors, and that measures of inflation expectations are creeping higher.
“It is becoming increasingly clear that the feature of this episode that has animated price pressures – mainly the intense and widespread supply-chain disruptions – will not be brief,” Bostic said.