The End of Supply Chain Issues Is Coming, Just Not in Time for the Holidays

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Global supply chain troubles are finally beginning to show signs of easing, but retail executives are saying that they don’t expect operations to return to normal until next year. Strong consumer demand, ongoing port congestion, truck driver shortages and higher global freight rates still stand in the way of a full recovery. On top of that, extreme weather and COVID-19 outbreaks could threaten to congest supply chains once again.

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The number of ships waiting at the ports of Los Angeles has improved, yet is still near record levels. The Wall Street Journal reported that there were 71 container ships anchored offshore on Nov. 19, down from 86 three days prior, according to the Marine Exchange of Southern California. About 17 more were expected to arrive within three days. It was unusual for ships to anchor offshore pre-pandemic.

Shipping and retail executives expect the U.S. port backlogs to lighten in early 2022 after the holidays and Lunar New Year factory shutdowns, the WSJ noted.

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Trans-Pacific freight rates have also gone down. According to the Freightos Baltic Index, the cost to move a container across the Pacific fell by more than a quarter in the week ended Nov. 12; however, rates are still more than three times what they were last year, the WSJ reported. A 40-foot container costs roughly $14,700.

However, the truck driver shortage continues to be at a historic high. According to the American Truckers Association, the U.S. currently faces a shortage of 80,000 truckers. “Increased demand for freight, pandemic-related challenges from early retirements, closed driving schools and DMVs, and other pressures are really pushing up demand for drives and subsequently the shortage,” said American Trucking Associations’ Chief Economist Bob Costello.

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On the positive side, most U.S. retailers have imported what they needed for the holiday season. The WSJ added that many big chains, like Walmart, Home Depot and Target, said they are prepared for the holidays because they imported goods earlier this year.

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About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.

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