As Logistics Crisis Worsens... US Biden Pushes for 24-Hour Operation of LA and Long Beach Ports

[Asia Economy Reporter Seulgina Jo] As the global logistics crisis intensifies ahead of the year-end shopping season in the United States, the Joe Biden administration announced on the 13th (local time) measures to alleviate cargo congestion at major U.S. ports.

According to U.S. economic media CNBC, the Biden administration held a virtual meeting on the afternoon of the same day to discuss plans to operate major West Coast ports such as Long Beach and Los Angeles (LA) in California, where cargo congestion is severe, 24 hours a day, year-round. Major U.S. delivery and retail companies including FedEx, UPS, Walmart, and Home Depot also attended the meeting to explore ways to extend delivery hours and ease transportation paralysis.

The ports of LA and Long Beach, which account for about 40% of the container shipments entering the U.S. across the Pacific, have recently been struggling to process cargo on time due to severe bottlenecks. On the 7th, it was reported that as many as 60 container ships were waiting offshore near these two ports to unload cargo.

CNBC stated, "Before the pandemic, seeing even one ship waiting was unusual," and added, "The massive bottlenecks at California ports are the result of a combination of domestic and international factors, including a surge in U.S. durable goods demand, outdated cargo and rail systems, and a shortage of skilled port workers on the West Coast." Earlier, President Biden personally met with the leadership of the LA and Long Beach ports and the International Longshore and Warehouse Union to discuss related issues.

The recent logistics crisis is not only affecting loading operations at major ports but also inland transportation. This is due to a shortage of truck drivers to transport cargo from the ports inland. According to the Job Openings and Labor Turnover Survey (JOLTS) released by the U.S. Department of Labor, the number of resignations in August was 3.27 million, the highest since the statistics began.

Although the Biden administration has taken steps to address the issue, concerns persist that the logistics difficulties, which have expanded globally since COVID-19, will not be easily resolved. The cost to ship one container from China to the U.S. West Coast surged from about $3,000 in August 2020 to over $20,000 in September this year. The New York Times expressed concern, stating, "The bottlenecks are worsening due to increased and earlier ordering of products ahead of the year-end holiday season."

Some warn that if this logistics crisis spreads ahead of the biggest year-end sales period, including Black Friday and Christmas, it will inevitably impact corporate earnings and lead to a decline in economic growth. Many U.S. manufacturers rely heavily on outsourcing most of their production to Asian regions such as China and Vietnam. The International Monetary Fund (IMF) pointed out the impact of supply chain disruptions including the logistics crisis and lowered the U.S. economic growth forecast for this year from 7.0% to 6.0%.