Quoted from “Haiwainet”/ Translated by HJM / October 18, 2021
In the face of the growing supply chain crisis, CNN reported on October 14 that US President Biden in the speech on October 13 announced a ”90-Day Sprint Plan” to deal with the “supply chain nightmare”, including allowing the port of Los Angeles to operate in a 24-hour non-stop mode, issuing additional commercial driver licenses and increasing the workload of logistics enterprises. Politico, an American political website, said in an article on October 14, “affected by the Covid-19 pandemic, we are experiencing the most serious supply chain crisis in the global logistics industry since entering the shipping container era in the late 1950s.”
The United States fell into “supply chain chaos”
The scene of “containers piled up like a mountain” in American ports has become the focus of American media recently. A report in the New York Times focused on “American ports under the chaos of the supply chain”, saying that “everything is abnormal”. The report describes the backlog of goods at Savannah port, Georgia: nearly 80000 containers are stacked together in various forms, 50% more than usual. “The ‘supply chain chaos’ has caused that one of the largest ports in the United States has no place to put things,” the article said.
With the increasing backlog of goods in ports, more and more industries in the United States have sounded the “supply alarm”: originally just construction raw materials and semiconductor parts, now it has recently spread to the field of retail goods and energy. Americans worry that with Christmas approaching, the scarcity of goods on American mall shelves will become more and more serious. In an interview with Fox News on October 14, an American home accessories and building materials merchant warned that “the supply chain shortage is becoming a national emergency, and the supply chain shortage has not improved”.
The outbreak of this supply chain crisis is the result of comprehensive domestic and global factors in the United States, but the intensification of labor shortage caused by the covid-19 epidemic undoubtedly worsens the already shaky supply chain in the United States. On October 14, the website of the Capitol Hill newspaper quoted chief economist of the US audit and tax company RSM, as saying, “the problem of the supply chain is not completely driven by consumption, but because of the lack of labor in the US transportation industry.” Biden declared in his speech on the 13th that goods will not move by themselves, He constantly urged the transportation and retail departments to increase business to “accelerate the pace” to deal with supply bottlenecks.
Politico believes that the supply chain crisis essentially reflects the long-term backwardness of the U.S. logistics infrastructure. “The U.S. infrastructure is far less than the best performing facilities in the world. Compared with the developed economies in the world, our degree of automation and efficiency are usually low”, “our logistics system is plagued by stupid policies and practices, and the efficiency is very low”.
“Lack of ready-made scripts for dealing with crises”
Many American economists believe that the White House’s package plan to deal with the supply chain crisis is imminent, but the prospect may be bleak. Austin Gulbis, an economics professor at Booth Business School in Chicago, said in an interview with the website of Capitol Hill that Biden’s measures to expand port throughput will only alleviate the problem, not solve the problem. Jason Furman, a professor of economic policy at Harvard’s Kennedy School, simply said, “the United States lacks a ready-made script for dealing with the supply chain crisis.”
The growing supply chain crisis is nothing new in the United States. The outbreak of Covid-19 is just another “Revelation of the vulnerability of the U.S. supply chain”. In early June this year,Biden government released the 100 day review report on supply chain vulnerability. The report pointed out: “Although the public health and economic crisis have amplified the supply chain problem, decades of insufficient investment and public policy decisions have led to the supply chain vulnerability of many industries and products.”
Under the guidance of this report, Biden government put forward an ambitious supply chain reconstruction plan, which is simply to ensure the “localization” of the production and supply of key products and ensure the diversified supply sources of products. On the one hand, Biden administration focused on rebuilding the supply chain resilience in the four key areas of semiconductors, drugs, key minerals and high-capacity batteries. It even organized the US Secretary of Commerce, the Secretary of Transportation and the Secretary of Agriculture into a supply chain working group to focus on solving the imbalance between supply and demand in the United States. On the other hand, compared with Trump administration, Biden administration seems to believe that strengthening internal cooperation in North America will help optimize and integrate the US supply chain. In March this year, Biden reached an agreement with Canada and Mexico to cooperate to solve the problem of supply chain security.
VOA pointed out in an article on June 23 ” Biden government takes the lead in reshaping the supply chain, but the implementation effect needs to be tested”. The report quoted an economist and expert at the Economist Intelligence Unit, as saying that Asia’s success in easing COVID-19′s interference in production has attracted global appeal for its convenience, maturity and low cost of production. At least in the medium term, the supply chain will not move out of Asia.
US economy cannot stay away from China
The supply chain crisis has become a major obstacle to the U.S. economic recovery. From the supply to the transportation, all links of the U.S. supply chain have been “crased” one after another. In addition to the surge in demand for durable goods in the United States related to the epidemic, the outdated highway and railway transportation system in the United States, the lack of sufficient warehouse workers and truck drivers to deliver goods, and the closure of many factories and ports in Asia due to the resurgence of the epidemic, the U.S. tariff policy towards China has long laid the groundwork for today’s supply chain crisis and intensified inflation in the United States.
After the United States provoked trade war with China, the United States transferred part of its supply chain to Mexico or Southeast Asian countries. However, since the outbreak of Covid-19, the supply chain of the United States in Mexico and Southeast Asia has faced the dilemma of interruption. Yu Chunhai, vice president of the school of economics of Renmin University of China and a dedicated researcher of the National Institute of development and strategy, analyzed in an interview said that before the epidemic, countries such as Mexico or Vietnam could alleviate the supply pressure of the United States to a certain extent. However, after the outbreak of the epidemic, it was difficult for these countries to recover from the epidemic, resulting in production stagnation and supply interruption. In fact, at present, the United States still depends on China for the import of many products. If China and the United States still maintain trade policy measures such as tariffs, the price rise effect will be more and more obvious.
Facts have proved that the big stick of trade sanctions wantonly waved by the United States finally fell on itself. The supply chain crisis is becoming an important inducement for sustained inflation in the United States: affected by the imbalance between supply and demand, the United States has faced an “inflation bomb”. Since June, data has showed that driven by rising energy, food and housing costs, consumer prices in the United States rose 0.4% month on month in September, up 5.4% year-on-year. “Supply chain restructuring is a long-term project. Biden can’t create a supply chain far away from China,” said a chief economist of the Asia Pacific Region of French Foreign Trade Bank.
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Post time: Oct-18-2021