U.S. supply chain crunch drags world down
Trucks wait to load containers at the port of Los Angeles, California, the United States, on Oct. 22, 2021. (Xinhua)
The U.S. supply chain crisis has grabbed global headlines as ships continue to dawdle at ports in the state of California.
Shipping companies have reportedly prioritized sending empty containers from the United States to China, while cutting shipping capacity to Japan and other countries for higher profits on routes between the United States and Asia.
Analysts said that the Asia-Pacific region and even the whole world have been plagued by the U.S. supply chain disruptions, which have triggered a chain reaction and severely challenged the recovery of the global economy.
The import and export sectors are paying the price.
Freight costs are up 30 percent from last year, Norman Krug, a U.S. farmer from Chapman, Nebraska, said at a Senate hearing, adding that the chaos has led to higher logistics costs and longer shipping times.
At the ports of Los Angeles and Long Beach, long queues of ships are a common sight, and tens of thousands of containers full of goods cannot go ashore.
In mid-August, the wait time for each freighter to unload was six days at the Port of Los Angeles; today, the time is 10 to 12 days.
From January to October this year, the total sea container volume from Asia to the United States increased by 23.9 percent year-on-year. Freight per 20-foot equivalent units on China-U.S. routes soared from 1,500 U.S. dollars in 2019 to 28,000 dollars this summer, and remains as high as about 8,400 dollars, according to Descartes Datamyne, a U.S. company specializing in logistics and supply chain solutions.
Professor Dale Rogers with Arizona State University said the monthly U.S. Logistics Managers' Index, which reached 73.4 in November, showed continued supply chain strains, and that the warehouse price index, a key sub-index, reached an all-time high.
Australian economist Guo Shengxiang said the United States, as the world's largest economy, has become a major demerit in global supply chains, dragging down its economic and trade partners and causing immeasurable damage to the world economy.
Many industry analysts point to the U.S. government as the source of the problem.
The current disruptions began with the Donald Trump administration's trade frictions, which have caused severe supply and demand volatility, particularly a surge in U.S. imports from China, reported Forbes magazine.
U.S. merchants, at first, increased their inventory before the U.S. imposed tariffs on Chinese products, and then continued to stock up to prevent an escalation in trade frictions. U.S. companies have become more dependent on Chinese goods due to the COVID-19 pandemic, making the China-U.S. routes busier.
"What we've seen with the surge in imports is that it is a 5:1 ratio: five imports that come for every one export," Port of Los Angeles Executive Director Gene Seroka was cited by Time magazine as saying. "So that means that the biggest export is air."
John Butler, CEO of the World Shipping Council, said the current crisis is not rooted in shipping companies but in uncertain and contradictory U.S. policies.
Experts said the crisis involves a wide range of issues and is difficult to resolve in the short term.
First, due to a huge fiscal stimulus, holiday consumption and other factors, the demand for U.S. imports from Asia continues to grow, which reflects the deep integration of the China-U.S. economies, and that the strong demand from the United States will result in more pressure on international shipping.
Second, as the total number of COVID-19 cases in the United States surpassed 50 million and the death toll from the disease topped 800,000, the country's bleak COVID-19 reality will intensify already-strained supply chains.
Moreover, the structural problem of U.S. logistics remains unchanged and the shortage of truck drivers has not improved. According to the American Trucking Associations, the country is short of 80,000 drivers, with the shortage expected to balloon in the future.
Gu Qingyang, an associate professor at the Lee Kuan Yew School of Public Policy of the National University of Singapore, said the U.S. supply chain crisis is likely to continue, and countries should make early preparations to avoid more harm.
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