Biden’s supply chain plan will mostly help larger companies, say small-business owners

Written by on October 13, 2021

Small businesses are hopeful that shipping bottlenecks may begin to ease after President Joe Biden announced a new initiative that will see the congested port of Los Angeles run “24/7.” But owners and experts warn that the ports are just one part of the supply chain logjam.

“With the holidays coming up, you might be wondering if gifts you plan to buy will arrive on time,” Biden said at a news conference on Wednesday. “Today we have some good news. We’re going to help speed up the delivery of goods all across America.”

“Our goal is not only to get through this immediate bottleneck, but to address the long-standing weaknesses in our transportation supply chain that this pandemic has exposed,” the president said.

The new plan calls for the West Coast ports of Los Angeles and Long Beach to operate night shifts for the next 90 days to help alleviate backlogs ahead of the critical holiday shopping season.

“This supply chain crisis is hurting businesses and consumers alike, leading to inflation and shortages of key supplies,” said Suzanne Clark, president and CEO of the U.S. Chamber of Commerce, which participated in meetings today with the White House to address these issues, in a statement. “Coupled with massive labor shortages, this is a major threat to our fragile economic recovery and long-term competitiveness.” Others attending included the heads of Walmart, UPS, FedEx, the American Trucking Association and the International Longshoremen and Workers Union.

Small-business leaders say they’ve been dealing with delays for over a year now.

Megan Gluth-Bohan, the CEO and owner of TRInternational, Inc, a 30-employee chemical distribution company, says her customers have been clamoring for citric acid, caustic soda and propylene glycol for applications ranging from industrial cleaning to beverages to the suspension fluid for vaccines, largely sourced from South Korea and southeast Asia.

Backlogs at Long Beach and Los Angeles have added nine to 12 weeks to her delivery time, and more than doubled her shipping costs.

“It’s deeply unnerving and disappointing to not be able to deliver when we would like to deliver — and, frankly, to not be able to deliver in as cost-effective a manner as we used to. These increased freight costs have reached a point where it exceeds my margin, and exceeds what I can do. So we now have to pass that along to those customers, and those customers will pass that along to the end consumer,” she said.

Gluth-Bohan said she welcomed news that the administration was getting involved with trying to untangle the shipping snarls.

“I’m thrilled that the White House is paying attention,” she said. “I think any time you can unstick what’s stuck and cause things to flow more freely without as much delay, that affects all of us in a positive way.”

“What the American public needs to understand is that this isn’t just for items that you get for Christmas shopping. This is for items that you use to clean your clothes, or to have liquid oxygen and ventilators at a hospital,” she said.

The supply chain has been stretched, kinked, and squeezed at every turn due to pandemic economic disruptions.

A decrease in the flow of goods from the U.S. to China has meant there’s not enough shipping containers to bring items over. Some companies have taken the extreme and costly step of ordering new ones built.

There are not enough truckers to bring all the goods to shelves, as demand spiked and drivers took early retirement or sat out the boom due to concerns about contracting the coronavirus.

Longshoremen needed to unload and maneuver heavy steel containers at ports are in shorter supply due to Covid restrictions and sicknesses.

Across the board and down the aisles, small business owners say they’ve been feeling the shipping impacts.

The fireworks industry faced the Fourth of July this year with reduced selection and skimpier shelves due to the shipping issues.

Even when a cargo container loaded up with their supplies is removed from a ship, it can remain lost in a labyrinth of stacked containers at a port for months, said William Weimer, vice president and general counsel of Phantom Fireworks. The industry welcomed the news from the administration.

“We are very happy that the White House has done this. Hopefully it will help to the extent of getting ships in and out quicker,” Weimer said.

Fireworks sellers are still dealing with shippers who have reduced the amount of space they’re willing to devote to their goods.

“Getting the ships in and out of the ports is a very big deal to be sure, but still just one of the cogs in the entire supply chain process,” Weimer added.

Transportation and shipping professionals are skeptical that the move will make a significant impact.

“Moving to 24/7 and night time will cause a minor efficiency gain. However, the backlog and continued volume ramp for the holiday peak will still be a major challenge,” said Glenn Koepke, SVP of customer success at FourKites, a Chicago-based logistics software firm.

Small-business owners said larger companies with more clout and buying power are able to flex their muscles to make sure their shipping needs get taken care of first.

“Big players usually have contracts and negotiations with the shipping liners and agents who can fast track the unloading process, so these global companies might not suffer much in this scenario,” said Antonio Gioia, president for Magtec Corporation, a paper and petrochemical importer based in Miami.

Smaller businesses may have trouble having their voices heard at the table as private and public sector solutions are sought, Gluth-Bohan said.

“People who are running a small business who maybe don’t have 50 containers on a ship, maybe they just have one. But for them that one container represents payroll for the next two months,” she said.

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