Meanwhile, Americans are facing shortages. Schools are having a hard time sourcing food for lunch programs. Food producers are missing inputs for packaging, while small businesses are facing shortages of bulk items like utensils, cups and to-go boxes. The government attributes these delays and shortages to worldwide factory disruptions during the pandemic and increased consumer demand. While these play a role, that is not the whole story.
What led to this crisis is a system of government-imposed regulations and red tape that seemed innocuous when the economy was healthy. A series of barriers in California, and at the federal level, prevented the market from responding efficiently to the demand at the ports. First and foremost, union hour rules for longshoremen and truckers have resulted in port operations not matching the influx of ships. The Port of LA has been operating at only 60%- 70% of capacity, closed evenings and Sundays. While Long Beach promised months ago to go 24/7, it’s still only running 4 days per week.
At the same time, California law is restricting independent contractors, which includes many truckers, from stepping in. And that state’s new emissions mandates limit the number of trucks able to even operate there. Amid such rules, California now has half the trucker density as states such as Texas, Pennsylvania and Ohio. To add insult to injury, these 2 ports just announced a new fine system for containers that remain at the ports too long, even though there aren’t enough trucks on the road to transport the containers. An impending vaccine mandate could worsen the ports’ labor shortage.
Classroom discussion questions:
- What are the the solutions?
- What other factors (besides the ports) are creating these supply chain problems?