The supply chain arises further as we head into the Christmas season; it's hard to keep from considering supply chain problems. In the end, thoughts of a turkey, wine, cranberries, and gingerbread, Christmas trees, presents, and a well-deserved break are much more fun.
Since dock workers aren't working, the lack of workers has created a massive bottleneck in the supply and getting goods onshore and into distribution channels. However, the more I looked into this situation, I realized that our challenges were direr.
The problem is that 82 percent of drivers for port trucks who collect containers from ports and transport them to distribution or warehouse facilities are independent drivers. It might not seem like a problem if ports functioned correctly that they wouldn't pose an issue.
Now, this disaster is not entirely the responsibility of truck operators. It can take hours - or even up to a whole day to get into the port, collect a supply chain container, and exit the port facilities. If you're compensated per hour, this might not be an issue.
However, more than 80 percent of the drivers of port trucks are self-employed. They are paid by the cargo load. Because of this, they aren't able to wait all day to collect just one container.
Most independent contractors finance their semis, which means they're operating at a hefty expense. If they're not moving the load, they're not getting paid. If they're not earning money, then they aren't able to meet their expenses.
The result is the departure of many truck drivers from the trucking business and the shift of these drivers away from ports. Therefore, they'll choose regional or long haul freight that uses their time effectively and is not misused. It's a smart move if they are paid by the load nevertheless.
In the meantime, until the port congestion situation is sorted out, this issue will continue to linger much longer as it will get worse than it is now. The scope of the problem is enormous, but the motives also contradict what we would believe.
The truth is that ports and shipping supply chain companies are earning profit by the bucketful. They're making more money than they could shake a stick at it at the moment. The more prolonged cargo containers are kept at ports, the higher the port can charge for storage.
The longer this problem continues, the greater the chance for port operators' profits to increase. Contrary to what the government would like the public to believe, global factories aren't closed because of COVID - The world's factories are running amok.
The shortages in labor are directly a result of the failure of government pandemic policies (perhaps by design) to stop the spread of the virus that we recognized and did not stop nor slow the spread of the disease. But this could all have been prevented.
I do not intend to set my sights low for the holiday season. I'm planning to have a blast with my family and friends, and I'm hoping you will too. This supply chain issue relating to ports is common to this region of the United States as many ports across the globe are doing surpassingly well.
We must ensure that those who led us in this mess are accountable and that the destructive policies don't remain in place, hopefully not permitted to be implemented in the future. Hopefully, as We The People, gained a lesson from this whole mess.
It's important to note that the supply chain issue affecting consumer goods in America is entirely separate from the problems with semiconductors affecting certain areas within the electronics industry. The semiconductor chip issues are not related to COVID but are driven by high demand from the economy for the most recent generation of consumer electronics and EV's (electric vehicles).
In essence, it's a good problem to have, and it's especially beneficial to companies that manufacture semiconductors or provide semiconductor makers with products and services.
Although the "technology shock" will persist through the year-end and possibly through 2023, new manufacturing capacity is being put online each month.
New semiconductor manufacturing facilities are being constructed within the United States to ensure more stable and secure production. We're just beginning what I consider to be the "American manufacturing renaissance," which is part of a more significant, global trend of decentralizing manufacturing and returning production to America.
This phenomenon is not just about creating jobs, but it also about creating the security of supply chains and drastically reducing costs for logistics; it also benefits the environment. It also helps by reducing carbon emissions by not transporting materials goods across the globe, only to swing around and send finished goods back again.
There will be many exciting years ahead as this change is taking place. It will be a massive expansion of the next-generation products that make the most application of robotics, machine learning, and automation.
The undergoing an industrial revolution is taking place, and we'll be there at every stage of it.
This article was printed from TradingSig.com