Opinion

Shipping Issues Threaten Economy, Public Health

With America’s businesses, economy and consumers still reeling from the COVID-19 lockdowns, a new threat has emerged that requires immediate attention from the Biden administration and lawmakers on Capitol Hill. At the onset of the global pandemic, American businesses began experiencing extreme delays at U.S. ports. But what began as a shortage of shipping contain­ers and labor at certain West Coast port facilities is fast morphing into a dangerous breakdown of the nation’s supply chain infrastructure.

Long port delays are not common in the United States. However, as shipping containers have increasingly been used to deliver protective equipment and vaccines to parts of the world that don’t generally have significant liner service, these containers have also inadvertently been stranded in ports that are not part of the main east-west trade routes. To make matters worse, some of the largest ports in the country are located in some of the most restrictive states, meaning that labor shortages have been compounded in Los Angeles/Long Beach, Oakland and Seattle, as well as in the giant port of New York/New Jersey. Ocean carriers trying to access these ports are having their entry significantly delayed.

At the same time, stimulus spending on goods in a time when fewer services are available has led to an increase in U.S. demand, resulting in a surge of imports and filling ships, containers, rail cars and trucks. This surge in imports, coupled with reduced exports, has reduced backhaul opportunities on major trade routes. Furthermore, international shipping has become much less reliable, with delays for some shipments reported to be as much as 150 days.

As a result, inventories of chemicals have been falling for the first time since the great recession. This means that shipping delays could soon lead to shortages, particularly of those chemicals imported via the West Coast.

Chemical distributors aren’t often in the spotlight, but as companies which process, formulate, blend, re-package, warehouse, transport and market chemical products for over 750,000 customers, we are on the front lines of this crisis. Any shipping delays we experience have broad implications for the entire U.S. supply chain.

The great toilet paper shortage of 2020 was inconvenient for millions of Americans, but chemical shortages in 2021 could have much more serious implications. Continued lengthy delays in glycerin, a common ingredient in pharmaceutical drugs including COVID-19 vaccines and other medications as well as chemicals needed for soaps, detergents, household and industrial cleaners and many other products, could not only slow economic recovery but also jeopardize public health.

Along with these delays, shippers have also had to grapple with higher prices and greater delays from ocean carriers — who have cemented historic, record-breaking profits during the pandemic. According to some reports, the price of a 40-foot shipping container on the east-west trade has risen from about $3,000 last Thanksgiving to about $5,000 today, and idle container capacity is stuck below 3 percent. These increases are already impacting the cost of consumer goods and prices will only continue to go up.

It is critical that the United States address this shipping crisis immediately to alleviate the strain on American businesses and consumers. Congress and the Biden administration must take action to clear the intermodal freight bottlenecks that are slowing the import and export of goods. They can also support the U.S. manufacturing base for shipping containers and chassis so that American manufacturers can produce the containers and related equipment U.S. importers and exporters need to meet increased demand.

The coronavirus pandemic has given rise to the shipping crisis that the United States is facing today which, without action, could linger for months, if not years. These disruptions threaten to jeopardize our country’s economic recovery from the COVID-19 crisis when we can least afford it. Chemical distributors stand with the many other industries being impacted by these delays and price increases to work with lawmakers to advance solutions. Getting this right will put us all on better economic footing as we look to recover from the economic impacts of COVID-19.

 

Eric R. Byer is president and CEO of the National Association of Chemical Distributors, an association of more than 400 member and Affiliate companies which represent over 85 percent of the chemical distribution capacity in the nation and 90 percent of the industry’s gross revenue. 

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