Ships backed up on West Coast
One of the most visceral representations of the supply chain crisis was the images of dozens of ships moored off the coast of California eagerly waiting to unload their goods. The Port of Los Angeles and the Port of Long Beach account for roughly 40% of U.S. imports, so having them backed up created headaches all across the country’s supply chain.
The problem was compounded because of the lack of port workers and truckers to take the goods and move them out of the port and because of surging demand in 2021 as people emerged from their virus-induced isolation and returned to normal purchasing habits. Back in October, during some of the worst snarls, imports to the Port of Los Angeles were up 30% in 2021 compared to the preceding year.
Trucker shortage
Truckers are a critical component of the country’s supply chains and were in short supply in 2021 as the U.S. experienced labor shortages across several industries.
The American Trucking Associations has steadily sounded the alarm about a truck driver shortage. Chris Spear, the president and CEO of the ATA, estimated earlier this year that the industry is now down about 80,000 drivers amid the supply chain crunch — a record high.
One of the proposed solutions to help fill the gap would be to allow those between the ages of 18 and 21 to participate in the labor market after proper training. Currently, federal law permits those under 21 to obtain commercial driver’s licenses, but they can’t drive across state lines, severely limiting their ability to improve the supply chain problems.
Chip shortage
The economy is also suffering from a global semiconductor chip shortage. Semiconductors, a vital (and expensive) part of modern-day gadgets and cars, have seen a huge uptick in demand over the past few years, particularly during the pandemic, causing a global shortage.
Some car companies were forced to halt production lines at major factories because of the shortage. Complicating the matter, the U.S. relies on foreign countries such as China to provide semiconductors, so when supply from overseas doesn’t meet U.S. demand, the country finds itself in a bad position. The Senate passed a bill in June with almost $250 billion in new funding for chips, U.S. production, and research.
One of the most prominent downstream effects of the chip shortage included an explosion in the price of used cars, as new vehicles were in short supply. Rental car companies also sold off some of their fleets during the pandemic, and the shortage of available cars led to higher prices for people trying to rent a vehicle.
Biden intervenes in supply chain issues
In light of supply chain challenges, President Joe Biden has sought to use the power of the White House to help. The administration announced in October that the Port of LA would begin operating on a 24/7 basis to move products from overseas into the country more quickly. After meeting with White House officials, several companies such as FedEx and UPS also announced they would scale up operations prior to the holiday season.
The White House also announced a multifaceted plan designed to increase worker recruitment and retention in the trucking industry, given worker shortages. Among the initiatives are helping to connect veterans to the industry and emphasizing apprenticeship programs for would-be truck drivers. The Biden administration said it is also working to make obtaining a commercial driver’s license easier, which is required for truckers.