Joe Biden has received commitments from Walmart, UPS and FedEx to extend their working hours in an effort to reduce supply chain bottlenecks weighing on the US and the global economic recovery.
The three companies committed on Wednesday to move to a 24-hour, seven-day-a-week model as part of a broader effort to help eliminate the mismatch between growing demand and lagging supply and reduce shortages.
The corporate US moves were unveiled at the White House summit hosted by Biden, who met with corporate executives, port and freight managers and union officials to discuss the tense state of global supply chains.
“I know you hear a lot about something called supply chains and how hard it is to get all kinds of things from a toaster, sneakers, a bicycle to bedroom furniture,” Biden said after the event. “Today’s announcement has the potential to be a game-changer.”
Senior officials in the Biden administration noted that together, UPS and FedEx shipped 40 percent of U.S. packages in volume by 2020, and their move would spur others to do the same. They also singled out Target, Home Depot and Samsung for taking steps to move more containers out of ports.
The Biden administration has pushed rail freight companies, trucking groups and ports to increase their own capacity to meet rising demand. However, many are struggling to find sufficient staff and the scarcity of warehouse space near the ports has exacerbated the bottlenecks.
A senior government official said the Port of Long Beach in California had taken steps to operate 24/7 about three weeks ago, while the neighboring Port of Los Angeles had decided to match that, with the critical support of the International Longshore and Warehousing Union. .
“It’s up to the terminal operators to actually open those hours and book the freight movements in the off-peak hours, so the workers have pledged they’ll be there. We know they are committed to doing this,” the official said.
The White House’s move to more aggressively force US business to ramp up hours and capacity stems from growing concerns that the economic recovery will be stymied by an extended period of supply chain bottlenecks that could also contribute to increasing inflationary pressure.
In an interview with CBS on Tuesday, Janet Yellen, the US Secretary of the Treasury, said supply chains were “extremely stressed”, noting that “nearly 100 ships” were docked outside the ports of Los Angeles and Long Beach “waiting for unloading goods”. But she was also confident that the problems would be solved.
“There could be isolated shortages of goods and services in the coming months. But there is a wide range of goods. And I think there’s no reason for consumers to panic about the absence of goods they want to buy at Christmas,” Yellen said.
Some analysts warned that the measures announced on Wednesday would not be enough. Brian Whitlock, a Gartner research analyst who specializes in logistics, said it would be too little, too late, to allay retailers’ concerns during the holiday season.
“What’s in ports today will take 60 days to get out, so Christmas is over,” he said. “Sure, every little bit helps, but this is a drop in the ocean in terms of what needs to be done.”
IHS Markit data measuring how quickly ports handle containers shows that North American ports are one-third as efficient as Asian ports, Whitlock said.
“You have these very efficient ports that are sending these big ships in waves because of these Covid lockdowns,” he said. “They unload these huge ships . . . to ports that are a third as efficient. Ultimately, they have to do their best to get containers out of the ports.”
According to a fact sheet distributed by the White House, Walmart specifically promises to “significantly increase” nighttime usage, increasing “throughput” — or capacity — by “as much as 50 percent in the coming weeks.” ”.
UPS has vowed to continue with 24-hour operations and more ported data exchange. FedEx said it would make changes that could double the volume of cargo leaving ports overnight.
Biden’s focus on supply chains has intensified over the year as it has become a source of weakness for an otherwise strong stimulus-driven economic recovery in the US, as well as a potential point of political vulnerability for Democrats ahead of the midterm elections. from next year.
In June, the president established a task force to address supply chain issues in areas ranging from semiconductors to rare earths and pharmaceutical ingredients. But the supply chain tightness has now extended to other more basic consumer goods, putting additional pressure on corporate America to clear the backlog.
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