Supply Chain Crush, Labor Shortages

By James M. Borneman

Markets in general are about people — and more importantly the emotions and fear they choose to act on.

Whether it is stocks, gasoline, the latest Xbox or toilet paper, consumers currently are moving markets by sharply increasing demand and, in some cases, well beyond the capacity of supply chains to replenish the surge.

The supply chain for textiles has suffered as well, not just imports of apparel but also goods and inputs throughout the supply chain.

A new surge appears to be happening today regarding Christmas shopping. More and more people — consumers and press — seem to be chatting-up fears of shortages
in a range of goods from appliances to apparel.

According to the monthly Global Port Tracker report recently released by the National Retail Federation and Hackett Associates, “Imports at the nation’s largest retail container ports should remain at near-record levels this month but could see a slight dip from last year’s unusually high numbers as congestion slows the movement of backed-up cargo.”

There may be shortages, but retailers want to maximize sales and have taken
steps to do so in this challenging market.

In a recent Barron’s article by Jack Hough titled, “Why Global Shortages Won’t Ruin the Holidays,” he reported: “’Many of our savvy retailers and importers advanced their orders,’ says Gene Seroka, executive director of the Port of Los Angeles. ‘We started seeing Christmas goods arrive on our shores back in June of this year. Normally, that arrival would take place at the end of August, beginning of September.’”

Hough goes on to explain: “Trans-Pacific shipments are up some 30% this year,
which has worsened a shortage of 40-foot shipping containers. The cost to send one
of them from Shanghai to Los Angeles has jumped to nearly $20,000 from $2,000 in a year and a half.”

Regarding port bottlenecks, Hough noted: “Under normal circumstances, the ideal number of ships to drop anchor outside of California’s San Pedro Bay Ports Complex, which consists of the busy ports of Los Angeles and Long Beach, is zero. Among the 88 vessels recently waiting to dock, 64 are carrying containers, with about half of these headed for each port. Port productivity is up, Seroka says, but truckers and warehouses haven’t added as much capacity as shippers, so unloaded containers are sitting at the port for six days rather than two, and at warehouse doors for seven or eight days versus three or four.

“The ship jam will not be cleared by Christmas, Seroka says.

“’There will be goods on the store shelves, in the fulfillment centers, for us to order,’ [Seroka] says. ‘My only advice is maybe for the American consumer, like I’m doing, to shop a little early.’”

And in textiles, unfortunately shipping is not the only bottleneck. COVID-19 has taken supply and manufacturing off-line. COVID-19 has also shifted consumer demand from
services to manufactured goods — again pressuring the supply chain.

But in textiles, as in most industries, labor is on everyone’s mind. As generous unemployment benefits expire, many wonder if the incentive to participate in the labor force will rise. The participation rate has been steady at 61.7 percent versus the pre-pandemic rate of 63.3 percent. Jobless claims are down after rising in September.

According to Robert Reichard’s “Textile Activity At A Glance,” in this issue, textile mill, textile product mill and apparel employment has improved year-over-year, but will U.S. textiles see labor improvements? Only time will tell.

September/October 2021