The chip shortage, auto parts shortage and California shipping port congestion is all part of the same supply chain issue. This is a nightmare that will not end soon.
As this nightmare at the California ports continues to persist, Gov. Gavin Newsom issued an executive order on Oct. 20 intended to alleviate the crisis that makes the problem worse. The executive order aims to find state-owned land and various other areas to temporarily store goods once they are removed from the port. It also removes weight limits on trucking freight routes to transport more goods.
On Wednesday, President Joe Biden said that the Los Angeles and Long Beach ports in California would be required to stay open 24/7 to fight the growing supply chain problems experienced throughout the country. So far, it is not working.
Of course, most of the seaports in the United States are manned by the International Longshoremen Association (on the East coast) and the International Longshore and Warrehouse Union (West coast). Further, U.S. ports, heavily reliant on union labor, are not as automated, as they are overseas.
A Micro / Macro Problem
None of this is going to resolve the problem, which is much deeper than California’s ports being backlogged. The supply chain issue is a critical part to our local, state and national economies. It will affect every aspect of our lives. How and why is this happening; I’ll explain.
Let’s take a closer look. As of today, there are over 160 ships waiting to dock and unload at the port. There are 106 ships offloading as of this report. The Longshoremen’s union off-loads the ships and loads them on the proper trucks. This is where the slow down happens.
The Longshoremen Union do not want to work 24 hours a day, even though the White House stated otherwise. There needs to be updates to the automation which would make this job more efficient.
There is a shortage of trucks, why is this?
Last year, legislators in the state of California passed Assembly Bill 5, or AB5, in an effort to protect workers who previously had been unfairly labeled independent contractors. AB5, commonly referred to as the “gig worker bill”, requires employers to reclassify these independent contractors as employees and treat them as such.
Bottleneck for 40% of US Goods
The Port of Los Angeles and Long Beach is the entrance point for 40% of all the containers coming into the United States.
Many truckers are employed as independent contractors, and AB5 only allows union truckers to pickup at the ports. So, owner operators who own their own trucks can not pick up at the ports and this is a huge part of the issue. According to the lawsuit against the state, many workers have been forced to drastically change the way they do business and others have lost their jobs due to the changes in the law.
Most motor carriers don’t own trucks or employ drivers. Rather, they work with owner-operator truck drivers. These drivers have traditionally been hired as independent contractors. The majority of the work done by the carrying company is transporting goods; the state is blocking these drivers from working.
AB5 could also complicate trucking that crosses state lines. Motor carriers would be forced to reconfigure routes or work with owner-operators to transfer their shipments to trucking companies who employ drivers. This whole process could be quite costly for the carriers and the owner-operators. Which means you pay more for your goods whether its automotive, food and everything else.
Here is the result of less truck drivers, containers sit for 7-8 weeks instead of days and that equals a 22 weeks delay of chip shortage to car manufacturers and other goods you use daily.
The result of the delay is surging inflation and the cost of everything including cars increasing as the supply shortage continues. There is no sign of subsiding in the near future.
A new issue to add to this mess is that containers have filled the ports and some companies are dropped these metal large containers on local residential streets. The terminals in LA can’t bring any ships in because there’s no room to put any containers on the ground. Most are empty. I have one solution for them, empty containers can be reused to build housing.
To add gasoline to the fire, there is a labor shortage to load and unload the trucks. As the back log doubles the supply chain is impacted. Look at food stores, auto parts and literally everything we need and want.
Here’s the Bottom Line:
California needs to lessen its restrictions, because enforcing AB5 throws the nation’s supply chain into further chaos and the impact to the economy is massive and causes economic scarcity. The chips and components are stuck on these ships as well as repair and replacement parts for your vehicles.
This supply chain issue is the result of too much control, too many regulations and too much government. Here’s another solution, buy what’s made in our country, buy local and small business when you can.
Lauren Fix, The Car Coach® is a nationally recognized automotive expert, media guest, journalist, author, keynote speaker and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and safety issues for both the auto industry and consumers. Her analysis is honest and straightforward.
Lauren is the National Automotive Correspondent for Newsmax TV, a conservative news net carried in 23 countries and in over 35 million U.S. cable/satellite homes. She is also The Weather Channel and Inside Edition’s auto expert. Lauren Fix serves as a juror for the esteemed North American Car & Truck of the Year Awards (NACTOY).
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