NB: The weak underbelly of both international outsourcing and JIT (just
in time
https://en.wikipedia.org/wiki/Lean_manufacturing ) is exposed below, and
a house of cards may be collapsing. Although Republiklans and their
propaganda arms such as Fox Lies and Liesmax will blame Democrats and
"entitlement programs" for the inflationary spiral that the article
below presages, the actual causes would be elsewhere -- one of which
clearly is displayed below. Is this sort of failure inevitable? Yes,
as JIT simply is too fragile.
https://news.yahoo.com/inside-americas-broken-supply-chain-204628616.html
Washington Post
Inside America's broken supply chain
David J. Lynch
Sat, October 2, 2021, 1:46 PM
The commercial pipeline that each year brings $1 trillion worth of toys,
clothing, electronics and furniture from Asia to the United States is
clogged and no one knows how to unclog it.
This month, the median cost of shipping a standard rectangular metal
container from China to the West Coast of the United States hit a record
$20,586, almost twice what it cost in July, which was twice what it cost
in January, according to the Freightos index. Essential freight-handling
equipment too often is not where it's needed, and when it is, there
aren't enough truckers or warehouse workers to operate it.
As Americans fume, supply headaches that were viewed as temporary when
the coronavirus pandemic began now are expected to last through 2022.
Dozens of cargo vessels stuck at anchor off the California coast
illustrate the delivery disruptions that have become the signature
feature of the recovery, fueling inflation, sapping growth and calling
into question the global economic model that has prevailed for three
decades.
Today's twisted supply chain is forcing companies to place precautionary
orders to avoid running out of goods, which only compounds the pressure.
Consumers are confronting higher prices and spot shortages of cars,
children's shoes and exercise gear, as the holiday shopping season looms.
"It's going to get worse again before it gets better," said Brian
Bourke, chief growth officer at SEKO Logistics. "Global supply chains
are not built for this. Everything is breaking down."
Fallout from the once-in-a-century health crisis is the chief culprit
behind soaring freight bills and delivery delays. Americans trapped at
home slashed spending at restaurants, movie theaters and sporting events
and splurged on goods such as laptops and bicycles, triggering an import
avalanche that has overwhelmed freight channels.
But the pandemic also exposed weaknesses in the nation's transport
plumbing: investment shortfalls at key ports, controversial railroad
industry labor cuts, and a chronic failure by key players to
collaborate, according to interviews with more than 50 individuals
representing every link in the nation's supply chain.
"It's like an orchestra with lots of first violins and no conductor. . .
. No one's really in charge," said Fran Inman, a Los Angeles-based
commercial real estate executive who has advised government agencies on
supply issues.
- - -
- Port of Los Angeles
On Sept. 1, 40 container ships belonging to companies such as Hyundai,
NYK Line and Evergreen were anchored off California, waiting for a
berth. (Less than three weeks later, the number reached 73.) Some
vessels sit for two weeks or more, effectively cutting capacity on
trans-Pacific shipping lanes and driving up costs.
"From an economic point of view, it's a disaster because cargo is
waiting," said Markus Grote, captain of a Hapag-Lloyd container ship.
For goods to move seamlessly from overseas factories to American
addresses, the oceangoing vessels, shipping containers, cargo terminals,
truckers, chassis providers and railroads all must work together, like
runners in a relay race. If equipment gets stuck at any point, delays
ripple along the entire chain.
Yet the United States is "decades behind" foreign ports in getting
carriers, terminals and shippers to provide each other access to
commercial data for planning purposes, said Gene Seroka, executive
director of the Port of Los Angeles. Concerns over data privacy,
business secrets and security have resulted in a fragmented approach.
Individual ports operate as separate fiefdoms rather than as part of a
national system.
In the Dutch city of Rotterdam, Europe's largest port, everyone involved
in a cargo vessel's arrival sees the same information on a common
data-sharing platform. Called "PortXchange," the software makes port
calls "smarter and more efficient" than the use of separate systems or
the telephone, according to the port's website.
Seroka touts a tool called the Port Optimizer, which forecasts three
weeks of incoming cargo. More information sharing - including over a
longer time period - would allow carriers, terminals, truckers and
dockworkers to better position equipment and people. But other than Los
Angeles, New Orleans is the only U.S. port that is even testing the system.
"Information sharing and additional transparency is one of the few areas
where indisputably we could get more capacity out of the current
system," said Dan Maffei, chairman of the Federal Maritime Commission.
To be sure, the United States is importing historic amounts of goods.
The L.A. port expects this year to handle a record 10.8 million
containers. To keep pace, the International Longshore and Warehouse
Union has accelerated training of new workers. Twenty union members have
died of covid-19 while working through the pandemic, the union said.
"Our members are tired. Our members are feeling the pain of these covid
deaths," said Mike Podue, president of ILWU Local 63. "We're lucky there
hasn't been a major accident."
When the supply chain works, goods flow continuously, as if borne along
by a river. Today, one bottleneck follows another. The problems are
especially acute on the Asia-to-U.S. trade route.
Once a berth becomes available, longshoremen operating massive blue
cranes lift the metal containers and position them to head inland via
truck or train.
Ideally, a truck driver who has been alerted to the presence of a
customer's goods arrives at a terminal to find a chassis waiting. The
container is then hoisted aboard and the driver pulls the chassis to the
customer's warehouse.
But too often, congestion elsewhere keeps the port jammed. Shippers with
full warehouses won't dispatch drivers to collect additional containers.
Many loaded chassis sit outside overstuffed warehouses for days waiting
to be unloaded, leaving ports short of needed equipment.
Even as cargo piles up on the docks, almost a third of the port's
night-shift appointments for truckers go unfilled.
At APM Terminals, the largest container site in the Western Hemisphere,
the air echoes with truck horns, air brakes and the warning beeps of
mobile cranes.
This 484-acre facility boasts 12 miles of railroad tracks, linking the
docks to points east for customers such as Walmart, Nike and Ikea.
Across from the headquarters building, trucks wait to navigate canyons
of containers stacked about 50 feet high.
Steven Trombley, the facility's managing director, needs the agility of
a hockey goalie to ward off the daily complications. Today, his berths
are full and four of the ships loitering in San Pedro Bay are impatient
for a spot.
Trombley has nearly a week's worth of truck chassis on the dock. But
truckers are scarce. Such mismatches help explain why containers
destined to travel by rail sit dockside for an average of eight days, up
from two before the pandemic.
"It's a headache. Cargo is sitting here longer than planned," Trombley
said. "If I don't get the cargo moving, then the next ship is not going
to have space."
Even as total federal ports spending has increased, the L.A. gateway has
been neglected, Seroka said. West Coast ports, including the L.A.-Long
Beach complex, which handles about 36 percent of U.S. imports, have
lagged East and Gulf Coast facilities over the past decade, $11 billion
to $1 billion.
With more money, the port could have expanded channels, fortified
wharves and improved road and rail links, he said.
One shortcoming: The lack of a direct rail connection to the
distribution centers for companies such as Amazon and Nordstrom 75 miles
east in California's "Inland Empire."
Advocates of a rail link say it would eliminate from Southern
California's freeways thousands of daily truck trips and ease port
congestion by moving millions of containers off the docks. But the
railroads doubt the financial case.
The backlog got so bad last fall that port officials opened overflow
lots to store thousands of containers
- - -
- APM Terminals, Los Angeles.
At Pier S, on the other end of a harbor island from APM, about 7,300
containers and chassis are parked. Some have been sitting for almost
three weeks.
One of the facility's users is TRAC Intermodal, the nation's largest
chassis operator. CEO Dan Walsh, a wisecracking Australian, said current
supply snags reflect Americans' greater reliance upon e-commerce.
"They expect things to come faster, which puts pressure on everyone in
the supply chain," he said. "They also expect to be able to return
things without cost."
TRAC has spent $1 billion over the past decade upgrading its
180,000-vehicle fleet for what Walsh calls "the permanent whitewater of
daily work."
The company has increased spending by 20 percent this year, adding
models that boast GPS locators, LED lights and antilock brakes. But
expanding more aggressively to meet the cargo emergency would not be
cost effective: new tariffs have made Chinese models unaffordable at a
time when domestic makers struggle to fill orders.
As demand for shipping has soared, carriers have grown choosy about what
they carry - eschewing hazardous chemicals and heavier products that
increase vessel fuel costs. They often decline to send containers inland
to collect American farm exports, preferring to rush them back to Asia
to capitalize on high eastbound freight rates.
That's why the L.A. port exports three times as many empty containers as
full ones.
The seven largest publicly traded ocean carriers - including companies
such as Maersk, COSCO and Hapag-Lloyd - reported more than $23 billion
in profits in the first half of this year, compared with just $1 billion
in the same period last year.
The soaring freight bills that fueled those profits, however, have put
smaller shippers at a disadvantage to giants like Wal-Mart or Amazon.
The biggest companies not only can more easily absorb higher costs. They
also negotiate more attractive contracts in the first place, which means
they can reliably get their goods across the ocean while smaller
companies struggle.
National Tree, a maker of artificial Christmas trees, was able over the
past three months to import only half as many containers as planned, CEO
Chris Butler said.
"We had contracts to bring in all of our containers. Those contracts
were not worth the paper they were written on," he said.
Supply interruptions first hit the United States in early 2020, as
Chinese factories closed amid coronavirus shutdowns. Shortages of Clorox
wipes, masks and other medical goods have evolved since then into a
kaleidoscope of scarcity, with appliances, toys, industrial parts and
semiconductors all proving hard to find.
Now, persistent cargo concerns are exposing the risks of ocean-spanning
supply lines and hyper-efficient "just-in-time" production strategies
that keep inventories and costs low.
A shortage of computer chips has shuttered General Motors and Ford auto
plants and left Whirlpool scrambling to keep refrigerators and
dishwashers in stock. Congestion in California prompted Levi Strauss to
reroute Asian cargoes to less crowded East Coast ports despite longer,
costlier journeys.
Cargo carriers are offering expedited VIP service for truly desperate
shippers, some of whom offer to pay any price to get their goods moving.
Craig Grosscart, SEKO's senior vice president for global ocean, said one
desperate shipper recently asked: "Do you take bribes?"
Others have pleaded to use helicopters to retrieve containers from
vessels offshore.
Long before the coronavirus, the United States lagged other major
economies in moving goods efficiently. In 2018, the World Bank ranked
the U.S. 14th out of 160 countries, down from ninth four years earlier,
based on a periodic survey of freight forwarders and cargo carriers.
Likewise, regulators with the FMC warned in 2015: "Congestion at ports
and other points in the nation's intermodal system has become a serious
risk factor to the relatively robust growth of the American economy and
to its competitive position."
Those earlier backlogs were sparked by unrest over a West Coast
dockworkers' contract. With that deal scheduled to expire July 1,
businesses in coming months will probably order more than normal to
avoid being caught short again, further aggravating congestion,
executives said.
Seeler Industries in Joliet, a maker of chemical solutions used in
household cleaners and municipal water treatment facilities, has been
forced to turn down several million dollars in orders because of
shortages of key ingredients and truckers to move them.
CEO Steve Seeler, who calls that a "significant" hit for his
family-owned business, said he buys whatever materials become available
for fear of missing out. Some imported chemical ingredients that once
took six weeks to arrive now take up to three times as long, making
just-in-time production "much more difficult, if not impossible," he said.
Asked to describe his current strategy, Seeler said: "We're praying.
That's what we're doing."
- - -
- Union Pacific rail yard, Joliet, Ill.
One of the main rail routes leaving the port leads to Union Pacific's
Global 4 facility in Joliet, which sprawls across the equivalent of 500
football fields.
The rail yard is essentially an inland version of the terminals in Los
Angeles. Like an industrial Lego set, the lot is replete with towering
walls of orange, green, white and blue containers.
Last year, as the economy rebounded from its spring plunge, cargo
arrived faster than it could be pushed out of the gate. This summer, the
problem suddenly became acute, with nearly 8,000 containers clogging the
paved ramp, roughly double the July 2020 figure, according to Union Pacific.
At one point, trains trying to enter the yard were backed up for 25 miles.
Frustrated truckers would drop containers at random spots, making it
harder to navigate the narrow aisles and slowing operations. In late
August, nearly all of the 5,500 parking spots were occupied by chassis
or containers waiting to be picked up, leading to grumbling that
shippers were using the yard as a warehouse.
"When things like this happen, the train can't get loaded and we're
wasting hours of service," said Thomas Moses, 49, a veteran locomotive
engineer.
The normal 3.5-day cycle for a chassis to exit with a container and then
return for another pickup stretched to 17 days. That slowdown meant the
facility would need an unimaginable 6,000 chassis for normal operations,
up from its customary 1,000. Those delays, in turn, meant more train
crews were needed. That takes time to assemble and adds cost.
In July, Union Pacific took the extraordinary step of temporarily
halting all trains arriving from West Coast ports. In Los Angeles,
Seroka said he was informed of the decision just one or two days in advance.
The railroad also reopened another yard, Global 3, which had been closed
in 2019 under a strategy known as "precision scheduled railroading," to
act as a relief valve. Used throughout the industry, PSR is "intended to
benefit customers" by providing more predictable service, according to
Union Pacific.
But union representatives and regulators question the associated job
cuts. Union Pacific's 31,000-person payroll is more than one-third
smaller than it was in 2015, part of a broader shrinkage across all
major railroads.
"You take that many people out of the workforce, I don't see how it
could but impact service," said Martin Oberman, chairman of the Surface
Transportation Board. "What's happening is just stripping down the
workforce."
Global 4 has reopened to incoming trains at 75 percent of its previous
volume. A planned doubling of capacity, with the introduction of five
massive new cranes, is scheduled for next year.
Union Pacific says it has reduced the number of stockpiled containers.
Managers have compiled pandemic lessons into a crisis manual known as
"the playbook" and are hiring again.
Ongoing efficiency studies aim at additional fine-tuning. Already, the
railroad is installing uniform signage at all Union Pacific facilities,
so that truckers will see familiar instructions no matter where they go.
"We've got it fluid," said Drew Steinkamp, general manager of the
Chicago service unit. "But we've got a constant volume coming at us."
Alvaro Ramirez has learned to be patient. Sitting in his green-and-white
Freightliner truck, stuck in line for hours at cargo depots, the veteran
driver listens to Conan O'Brien comedy routines, self-help audiobooks
and tai chi lessons.
"It helps me breathe and calm down," said Ramirez. "I used to be a
screamer."
He had good reason. Ramirez is almost 2,100 miles from the Los Angeles
port, where dozens of ships wait offshore. But he confronts the same
dysfunction.
With global supply lines in an epic snarl, it can take him five hours to
enter a Chicago-area rail yard, locate a customer's shipping container
and mount it on a truck chassis before hauling it to its destination.
Chronic rail-yard traffic jams last so long that he has learned salsa
dancing by watching videos on his phone while waiting.
Before the pandemic, Ramirez, 44, could make seven round trips in an
11-hour workday. That number fell to just one or two, forcing him to
switch to the less crowded overnight shift. Still, his earnings are down
20 percent.
Ramirez is a "drayman," a 16th-century term for the final cog in the
21st-century supply lines that link the American heartland to Asian
factories. His daily plight shows how today's disruptions feed on
themselves, like a line of tumbling dominoes.
At Road One Intermodal, which employs Ramirez and provides trucking
services at nearly 90 ports and terminals, a truck was out of commission
for more than two months while the company suffered its own supply chain
woes, waiting for a new clutch.
Even as business boomed, executives opted not to order new truck cabs,
after learning they could not be delivered until the end of next year. A
shortage of aluminum and factory labor made the schedule for new
trailers even more uncertain, said David McLaughlin, Road One's chief
operating and financial officer.
"This is my 46th year in the business. I've never seen anything like
this and it's not easily resolved," he said.
In July, when two of the nation's largest railroads restricted shipments
from the West Coast to their Chicago hubs, they reduced the backlog of
containers jamming their facilities but made port congestion worse.
As space aboard freight trains grew scarce, shippers switched to trucks,
driving over-the-road freight bills up by 85 percent compared to April
2020, according to DAT Solutions.
But many logistics companies are reluctant to add permanent capacity,
fearing they will be caught with too many ships, trucks or chassis (the
trailer-like frame that holds the containers) once consumer buying
patterns return to normal.
"You don't build a church for Easter and Christmas. You build it for the
average week," said Jason Hilsenbeck, president of Load Match, an
equipment clearinghouse in Naperville, Ill.
- - -
- American Sale warehouse, Tinley Park, Ill.
The supply chain ends at Bob Jones's door in Tinley Park, Ill., more
than 7,700 miles from the Chinese port of Ningbo, where many of his
products originate.
The president of the American Sale retail chain is one of the smaller
shippers buffeted by supply chain tumult. With eight stores in the
Chicago area, Jones imports annually about 150 containers of pools and
patio furniture. (Walmart, the nation's largest importer, according to
the Journal of Commerce, brings in several hundred thousand.)
Before the pandemic, the cost of shipping one container to his
200,000-square-foot warehouse was less than $5,000. In late August, the
bill hit $26,000.
Some of his containers sit for two or three weeks once they reach Union
Pacific's rail yard or a similar facility belonging to rival BNSF.
Jones passes some of the higher cost to consumers and absorbs some
himself. Since Americans have stocked up on outdoor products during the
work-from-home era, he makes up some of his losses on volume.
The uncertainty is his chief worry. Kinks in the supply chain mean he
has summer products arriving now when summer is a memory on the shores
of Lake Michigan. More out-of-season goods will reach the Midwest as the
snow flies.
"We have a typical supply chain route. This year, there've been hiccups
all along the way," Jones said. "It's not getting better. In fact, I
would say it's getting worse."