Economists expect shipping problems at large ports in the United States as well as the subsequent shortage in goods and price increases to persist into the middle of 2022 amid the ongoing supply chain crisis.
Roughly 77 ships are currently waiting outside docks in the Ports of Los Angeles and Long Beach, California, carrying a staggering $24 billion worth of goods waiting to be offloaded, CNBC reported, citing economists at Goldman Sachs.
And according to Goldman economist Ronnie Walker, the situation does not look set to improve in the immediate future as officials struggle to find a solution to the issue.
“Backlogs and elevated shipping costs are likely to persist at least through the middle of next year because no immediate solution for the underlying supply–demand imbalance at U.S. ports is available,” Walker said in a note to clients.
However, Walker noted that the pressures “should soon begin to ease” but only “slightly as we pass the ongoing seasonal peak in shipping demand ahead of the holiday season.”
About 250,000 containers of goods are currently stacked up on the docks due to delayed pickups from chassis shortages and a lack of space in railyards and warehouses. This is causing dozens of ships to back up at anchor outside the ports.
The situation has resulted in shipping containers taking triple the time they usually take to get through major U.S. ports, according to CNBC.
President Joe Biden has attempted to to alleviate supply shortages and disruptions before Christmas, but experts say that the process will take far longer.
Earlier this month, the White House released a statement saying it received confirmation from UPS, FedEx, Walmart, and other companies, as well as the Port of Los Angeles, to increase the number of shifts to deal with a backlog of container ships, labor shortages, and warehousing issues.
“This is an across-the-board commitment to going to 24/7,” Biden said after meeting with the CEOs of several companies, adding that “we need the rest of the private sector chain to step us as well.”
Biden also threatened on Oct. 13 to “call out” private companies who fail to assist his administration and step up to address global supply-chain bottlenecks.
“If the private sector doesn’t step up, we’re going to call them out and ask them to act,” he said in remarks at the White House.
But a toy company executive said the White House’s plan is too late, pointing to an ongoing labor shortage, while other economists note a lack of coordination among key industries within the supply chain.
“Whether the ports are open 24 hours a day or 48 hours a day, you cannot get labor,” MGA Entertainment CEO Isaac Larian said in a Fox News interview. “If you cannot get labor, you cannot get trucks, you cannot get the merchandise out.”
Biden’s plan “is too little, too late,” he said. “And frankly, it’s a political gimmick to me.”
Steven Ricchiuto, U.S. chief economist at Mizuho Securities, also said the White House’s plan likely won’t solve the root causes of the problem.
“What the president’s doing isn’t going to really hurt. But at the end of the day, it doesn’t solve the problem,” he said.
Goldman economist Ronnie Walker agreed, noting that, “The upshot is that the outlook offers no immediate fixes for the underlying supply–demand imbalance at U.S. ports.”
Walker added that Goldman Sachs analysts expect congestion at ports will “likely persist to some extent through at least the middle of next year” while “freight rates will likely remain meaningfully above pre-pandemic levels for at least the next year.”
In the meantime, the situation could leave consumers paying more for goods while having access to fewer items right up until spring, according to the chair of the Florida Ports Council.
“It’s really a perfect storm,” Chairman Jonathan Daniels told Fox News. “The logistics system itself is not capable, and it was not built to handle the surge that currently we’re going through in the United States.”
“They’re talking about the backlog not being cleared until sometime, maybe at the end of the first quarter, the beginning of the second quarter of next year,” Daniels continued. “If that’s going to happen, we can’t get those goods onto the shelves into the distribution center. You’re going to see increased prices, and ultimately, one of the big cost drivers associated with pricing happens to be the transportation system.”
Biden has said that the federal government will be “working with stakeholders across the supply chain for a 90-day sprint to the end of the year to troubleshoot and alleviate many of the bottlenecks we can quickly address.”
Jack Phillips and Reuters contributed to this report.