White House Announces Plan to Ease Port Congestion
White House Seeks Help From Nation’s Big Retailers, Shippers
With the US holiday shopping season at risk due to severe supply-chain bottlenecks, the White House announced a new plan to ease some of the congestion at ports on the West Coast. As it stands, the ports of Long Beach and Los Angeles in California are clogged with ships waiting to enter. Once cargo is unloaded from ships, ground transportation is also taking longer than usual due to truck driver shortages.
The Biden administration is turning to the nation’s biggest retailers and shipping companies including Walmart (WMT), Home Depot (HD), FedEx (FDX), and UPS (UPS) for help. Under the plan the companies will expand their overnight delivery and off-hours operations in Long Beach and Los Angeles.
Los Angeles, Long Beach Ports to Stay Open Around-the-Clock
The Port of Los Angeles will now stay open 24/7 following a similar shift by the Port of Long Beach last month. Combined, the two ports represent around 40% of shipping containers coming into the US. The White House also has the International Longshore and Warehouse Union in its corner. Members of the powerful union said they are willing to pick up extra shifts.
The White House is betting that ramping up operations during the night will move goods off container ships and ease some of the pressure in the supply chain. But this solution does not address the lack of truck drivers necessary to deliver the goods once they are unloaded at ports.
Earnings at Risk
The move to ease congestion at ports may be too late to impact some consumer goods manufacturers’ third quarters. With earnings season kicking off, concerns are growing that supply-chain issues will hit some companies’ bottom lines. Take sneaker and apparel maker, Nike (NKE), which reported results at the end of September. Plant closings in Vietnam due to COVID-19 outbreaks and shipping delays caused it to miss revenue forecasts. Even a record back-to-school in the US for the company was not enough to offset the challenges.
Supply-chain issues amid record demand has caused the White House to intervene, relying on some of the nation’s biggest retailers and shippers for assistance. It will be interesting to see if the plan is effective in moving cargo across the supply chain in time for the holidays.
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