Supply chain bottlenecks will persist unless one of two things happens, expert explains

·3 min read

Although businesses may be struggling with unexpected cargo delays, supply chain bottlenecks may not be resolved in the near term.

"I don't see a line of sight where this ends anytime soon," Weston LaBar, head of strategy at Cargomatic, a freight load-matching company, told Yahoo Finance Live (video above). Some experts even expect the supply chain problems to hit the holiday shopping season.

Container ships have been delayed for days at major ports on the West Coast, and trucking routes have been at maximum capacity as a labor shortage plagues the industry.

"One of the big impacts of COVID was the impact of e-commerce and the need for more drivers in the industry, the need for more infrastructure in the form of local delivery centers, to be able to get products to homes, and this continues to impact the supply chain," LaBar explained. 

A long exposure drone panorama of the Kwai Chung container port in Hong Kong. (Photo by Marc Fernandes/NurPhoto via Getty Images)
A long exposure drone panorama of the Kwai Chung container port in Hong Kong. (Photo by Marc Fernandes/NurPhoto via Getty Images)

And looking at forecasts through 2022, "I don't think you're going to see much of a dip in or reprieve in these bottlenecks," LaBar added, "until you see either consumer spending habits change or a massive investment in both our infrastructure and our workforce."

Stephen Lamar, president and CEO of the American Apparel & Footwear Association, told Yahoo Finance Live on Friday that the current situation "is a crisis of epic proportion, and it's really just been getting worse."

Due to massive delays at the Los Angeles and Long Beach ports, shipping costs have rapidly risen north, as seen in the chart below by HSBC.

HSBC note from September 30.
HSBC note from September 30.

Lamar warned that not only are those hikes likely to be passed on to consumers, but they could also affect the country's economic recovery. 

"Unfortunately, when you look at these high freight costs, when you look at the delays, customers are gonna find empty shelves, they're gonna find higher prices," Lamar said. "And ultimately one of the things we're afraid of is that that's going to mean job losses. Because if companies can't get their goods in, if they can't sell their goods, that means they don't have the revenue to keep workers on payroll."

Oxford Economics
Oxford Economics

According to LaBar, a unique cause for the labor shortage in the trucking industry, one that his company works closely with, is due to the specialized needs some products require.

"When you have a need for a hazmat driver because you have hazardous materials or you have a need for a driver to have special permits or qualifications, like going in and out of sea ports, or going in and out of rail ramps," LaBar explained, "that obviously creates a bigger constraint because we have a massive truck driver shortage."

Getting the right type of truck drivers for specialized commodities and products is "where we've seen the biggest delays," he stressed. 

Lamar called on the White House to provide additional support during this period, such as suspending the tariffs imposed by the Trump administration and concentrating efforts to address the bottlenecks.

Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.

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