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The Biden administration is pulling out all the stops to address supply chain issues sparked by the coronavirus pandemic — but Cabinet officials fear it might not be enough to ease major shipping industry bottlenecks during the holiday shopping season.
Transportation Secretary Pete Buttigieg said shipping delays are "largely" a "private sector issue." While the administration is taking steps where it can, he said there is little it can do to speed up the delivery of consumer goods ahead of a higher-than-normal holiday rush.
"We have record traffic at some of these container ports," he told Bloomberg. "Part of what's happening is as people's incomes have returned, they're spending less on things like going to crowded theaters or restaurants, compared to on physical goods, which puts a lot of pressure on our shipping supply chain resources. So these challenges are going to continue in the months and years ahead."
Still, the "short-term" delays caused by pandemic demand are compounding "a longer-term issue that's going to take years and years to address." Buttigieg argued some of these problems could only be addressed by passing the president's $1.2 trillion physical infrastructure package.
Buttigieg and Commerce Secretary Gina Raimondo are two of the administration's top officials on the president's supply chain task force. That group has prescribed a number of steps to ease bottlenecks since launching in June.
Like Buttigieg, Raimondo suggests the administration's efforts to resolve those issues have helped "on the margin" but are "limited" in terms of resolving delays before the holidays.
"We were all so obsessed with the healthcare response," she told CNN of the administration's policy focus to date. "We were obsessed with jobs. I don't think anyone predicted how disruptive it would be to the supply chain."
Jason Furman, an economics professor at Harvard University and chairman of former President Barack Obama's Council of Economic Advisers, gave a more dour assessment.
"My guess is it doesn't add up to very much, but it's absolutely worth doing regardless," he explained. "They should be trying."
Biden has sought to exert executive power in recent months to address both the shipping delays and the price increases that follow supply chain issues.
Arguably the most significant driver of domestic shipping delays is the massive freight backlog in Southern California. California's coronavirus precautions and labor shortages have left Los Angeles and Long Beach ports, which account for roughly 40% of all U.S. imports, operating at roughly 60% capacity.
That operational downsizing, coupled with the unseasonably high orders Buttigieg mentioned, has stranded nearly half a million shipping containers off the state's coast this year.
The president installed John Porcari, a former deputy transportation secretary, to serve as the White House's port envoy in August. Porcari oversaw coordination between the Port of Los Angeles and the International Longshore and Warehouse Union, which reduced cargo dwell time from 13 to 4.4 days.
"We’ve got all hands on deck from the administration and folks that are really working the private sector at the C-suite level to bring together these plans and programs, like Accelerate Cargo LA and others," said Gene Seroka, Port of Los Angeles executive director, in an interview with Fox Business. "Moving towards more regulated service, hours of operation, and that just simply means that this large orchestra of players in the supply chain need to get on similar schedules. The port has expanded hours and days of operation — we need more of that from the warehouse community and the private sector in addition to bringing more truckers back to the industry."
Biden also directed more than $3 billion worth of U.S. Department of Agriculture investments toward lowering consumer costs for beef, pork, and poultry, which account for more than 50% of all food price increases since the pandemic began.
Furthermore, the White House has actively sought to ease semiconductor supply chain problems since Biden entered office. Most recently, Biden's supply chain task force has set up a new chip transparency initiative with Asian partners that will serve as an "early alert system" to help private sector manufacturers avoid future production stoppages.
"The Biden administration has had our embassies and our ambassadors personally in key countries in Southeast Asia engage with semiconductor plants to make sure their COVID protocols and operations are up to par and to engage with local and national governments to make sure," one senior administration official continued. "Government can then enable plants to operate in a COVID safe manner and minimize the duration and extent of shutdown. We're going to be taking these efforts a step further and trying the foundation that we've laid with increased interagency coordination."
Administration officials also hinted at granting tariff exemptions for Chinese semiconductor producers after announcing earlier this month that Biden's China trade policy review recommended keeping former President Donald Trump's Phase One deal largely intact.
Shipping delays are not just a pandemic problem for the United States. According to Capital Economics, the number of ships stranded outside Chinese ports in September 2021 was up nearly 200% compared to September 2019.
All of those factors led Scott Price, UPS's international president, to warn consumers to "order your Christmas presents now, because otherwise on Christmas day, there may just be a picture of something that's not coming until February or March."
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Original Author: Christian Datoc