Cargoes are piling up everywhere and making inflation worse: NPR
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John Nephew thought he had a winner with a new table game called “Dice Miner”. Importing games from China turned out to be its own roll of the dice.
Neveu, founder of Atlas Games in Duluth, Minn., Ordered a 40-foot freight container full of games in Shanghai last December, expecting delivery in about six weeks.
Instead, the games took nearly six months to arrive – an increasingly common example of supply chain bottlenecks pushing inflation to its highest level in more than a dozen ‘years.
âWe had booked something like eight different sea trips in a row and canceled them on our orders,â Nephew said.
Growing Americans’ demand for everything from iPads to cars is driving an increase in freight crossing the Pacific, hitting business owners like Nephew.
When the cargo with its games finally arrived on the West Coast, the container was immediately emptied so that it could be sent back to China for another load.
The games then continued to Minnesota by truck rather than by train, which would have been more economical. The final shipping cost was around $ 12,000, at least 50% more than what the game creator budgeted for.
Businesses across the country are struggling with similar challenges getting their goods.
The Port of Los Angeles has just recorded its busiest month in its history, handling more than a million shipping containers in May, more than half of which were loaded with imports from Asia.
âWe feel the pain of the importer and the exporter,â says Gene Seroka, executive director of the country’s busiest freight port. “The impacts that all of this has had are visibly damaging to these men and women trying to do their jobs in the supply chain.”
“This continues to show the strength of the American consumer during this pandemic-induced shopping spike,” adds Seroka.
The record volume of freight overwhelmed longshoremen, truck drivers, warehouses and railroads. Ships wait up to five days just to enter port, and it can take another 10 days for a container to be loaded onto a train.
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Things are not as busy on the east coast. But the cost of transporting a refrigerated container from Italy to New Jersey has climbed to $ 10,000, more than double the rate before the pandemic.
“They say there are not enough containers in Europe, lack of space on the boats,” says Philip Marfuggi, CEO of Ambriola and member of the board of directors of the Cheese Importers Association of America.
Not only is it taking up to twice as long for shipments to arrive, he says, but deliveries have become less predictable.
âLike the other day, I brought in eight containers,â Marfuggi said. “They should have been about two a week. And then all of a sudden they all came at the same time.”
All of this creates costs and headaches for businesses that have become accustomed to reliable, just-in-time delivery.
Federal Reserve Chairman Jerome Powell said these “bottlenecks” were greater than he and his colleagues expected, prompting the central bank to raise its inflation forecast this year to 3 , 4%. But Powell has expressed confidence that the freight constraints will not last indefinitely.
“Prices like that, which have been going up very quickly, due to shortages and bottlenecks etc. – they should stop going up and in some cases they should even go down,” Powell told the journalists last week.
The Biden administration has created a task force to address the most pressing shortages – like computer chips – while looking for ways to build more resilient delivery networks for the future.
âOne of the things the pandemic has exposed is just how vulnerable we have in our supply chain,â said Brian Deese, director of the president’s National Economic Council.
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As fears of a pandemic subside and people are able to spend more money on travel and entertainment, demand for goods is expected to decline.
But it could take months to resolve the traffic jams. With back to school and holiday shopping still to come, the Port of Los Angeles is expected to remain extremely busy throughout the fall. Seroka believes it will be early next year before freight volumes return to more normal levels.
This is bad news for business owners like Nephew, who are already bracing for even higher shipping costs after already having to pay 50% more to ship their “Dice Miner” games.
âIt’s just a mess,â says Neveu. “This shipping price is going to look like a bargain in the next few weeks.”