October 18, 2021
photo: Dean Musgrove
Thousands of containers piling up every day at the neighboring ports of Los Angeles and Long Beach, the main gateways to Asia for trade that feeds the U.S. with imported goods and also allows outbound domestically manufactured goods.
Americans are going through a new phase of the economy in which shortages of a surprising variety of things are being felt from covid-19 test kits, auto parts, construction material, semiconductors, ships, shipping containers, and even skilled labor, workers. The coronavirus pandemic has tangled global supply chains in a number of ways, and the rise of the Delta variant has led to several factory closures in Asia just as demand for products of all kinds has begun to pick up.
The most graphic expression of these shutdowns along the supply chain is reflected in the stacking of cargo containers on the coast of Los Angeles and Long Beach, containers that carry more than 90 percent of the world’s traded goods, mostly manufactured in China. The World Bank estimates that 8.5 percent of the world’s containers are currently detained at or near these ports, and increased import demand has driven up the cost per container and forced factory closures due to covid-19 restrictions have unleashed a wave of overpricing.
Before the pandemic, booking a container containing approximately 35,000 books cost $2,000. Now it costs $25,000. Shipping a package from Shanghai to Los Angeles is currently six times more expensive than shipping one from Los Angeles to Shanghai. Across the U.S., consumer prices are up more than 5% in 12 months.
Another factor in the cause of the bottlenecks is that the country has a shortage of about 60,000 drivers, due to recruiting problems, early retirements and driving school classes cancelled by covid according to the Minnesota Trucking Association
North America’s largest container terminals began working around the clock after the White House stepped in to address bottlenecks that complicate trade and drive up prices Starting this month, the U.S. Postal Service is cutting back on air freight to save money.
The so called solution in The Build Back Better plan, pushed by Joe Biden’s administration, includes billions of dollars to invest in basic research and strengthen domestic supply chains, but globalization, which creates bottlenecks in supply chains stretching from resource extraction in places like Australia to production in Asian factories and buyers in the West and it can hardly be remedied by a plan designed for the American consumer population.
Not long ago lines stretching outside supermarkets for basic necessities seemed to be exclusive to countries in the Global South, today there are plenty of stories in the U.S. media about the difficulties faced by the middle class in obtaining everything from toilet paper to auto parts. The International Monetary Fund (IMF) warned this week that disruptions in supply chains are making products more expensive in an economy marked by dependence on the goods that drive the global supply chain.
Unlike countries such as China, which managed to reactivate its economy and diversify negotiations with other producing and importing countries in the midst of the “transpandemic” stage, the U.S. has not managed to stabilize its economic fabric after facing the covid-19 crisis as an exclusively sanitary problem and not as a situation with multiple social and economic implications that, if mismanaged, will end up increasing the inequality gap even in peripheral countries.
-A Samuel Robinson Institute Report
Source: Mision Verdad, translation Resumen Latinoamericano, – English