President Biden has announced several steps to address the supply chain crisis dating back to August, but stores are scrambling to keep shelves stocked and prices are rising, with experts saying the problems could persist for at least another year.
Mr. Biden was scheduled to address the bottlenecks in a speech to the American people on Monday afternoon, but the White House abruptly canceled his remarks just moments before he was set to deliver them.
The speech was scheduled to occur after Mr. Biden huddled with the leaders of 10 major retailers and grocers to discuss the supply challenges during the holiday season. A White House official said the president’s remarks were canceled so he could spend more time with the leaders and that Mr. Biden will give a speech on the issue on Wednesday instead.
Still, the White House did announce its latest efforts to alleviate shipping issues on its new supply chain blog, which launched Monday.
The administration said it convinced port operators to waive fees for night and weekend pickup and persuaded another company to discount its night and weekend shipping rates. In addition, the Department of Transportation will extend the number of hours truck drivers can work until the end of February.
The moves are the most recent effort by the administration to untangle the supply chain mess. Since Oct. 13, Mr. Biden has delivered five speeches outlining measures his administration has taken to ease logjams.
He has offered solutions including spending $4 billion worth of construction at ports to ordering the Justice Department and probe possible illegal conduct that is keeping prices artificially high.
Yet, the supply chain crisis continues to loom over his presidency amid his dropping public-approval ratings, as Americans have become frustrated with shortages and the highest inflation in more than 30 years.
When Mr. Biden made his first major speech on the supply chain bottleneck, the U.S. rate of inflation was 5.4%. By Monday, it had swelled to 6.2%, fueled partly by the shortages that have hiked prices nationwide.
Import air freight prices rose 27.6% from October 2020 to October 2021, according to the Bureau of Labor Statistics.
A United Nations report concluded that if shipping costs continue to rise at the same level, global import prices could increase by 11% by 2023. That would raise consumer price levels by 1.5% over the next year, the report said.
Panos Kouvelis, director of the Boeing Center for Supply Chain Innovation at the University of St. Louis, said there is little a president can do to reverse the supply chain slowdown.
“At this point [Mr. Biden] is sending a message that he cares and is doing what he can, but some of the bottlenecks are out of his control,” Mr. Kouvelis said. “In the short term, there is not a lot he can do unless he is willing to bring in the National Guard to start driving trucks, which would be an extreme solution.”
Mr. Kouvelis said he expects Mr. Biden’s efforts could have a long-term impact, but not enough to help consumers immediately.
“These are investments that will take a while to happen,” he said. “I think the system is going to normalize by the second quarter of next year for most goods we care about. I think we have to be a little patient.”
But consumers are already frustrated as the supply chain chaos is sending prices soaring as the busy holiday shopping season begins.
Americans just celebrated the most expensive Thanksgiving ever. The average cost of a Thanksgiving meal for 10 people was $53.31, a 14% increase from last year, according to data from the U.S. Farm Bureau.
In contrast, the average price of a Thanksgiving dinner in 2020 declined 4% from 2019 to $46.90, Farm Bureau said.
Trade groups and analysts expect the price increases and supply shortages to continue through Christmas.
The prices of televisions are at their highest levels since 2012, and market research firm GDP Group estimates that holiday shoppers should expect to spend $100 more than last year. The company that manufactures the hot L.O.L. Surprise toy line warned that its items may struggle to reach stores and warehouses this holiday season.
In an earnings call with reporters, the CEO of Michael Kors said the company’s inventory was lower than expected, but was still hopeful it would be enough to meet holiday demand.
Even a live Christmas tree will cost as much as 10% more this year because of shortages and increased costs in transporting the trees to lots, according to the National Christmas Tree Association.
Despite the worries, no retailer or consumer group has reported empty store shelves. Ahead of his meeting with business leaders, Mr. Biden noted that consumers found plenty of goods to buy on Black Friday.
“Consumer spending has recovered to where it was headed before the pandemic. Early estimates are that Black Friday sales were up nearly a third since last year, and in-store sales were up by even more than that,” Mr. Biden said.
Also looming over the holiday season is the potential for the new COVID-19 variant omicron to disrupt global supply chains.
Commerce Secretary Gina Raimondo said Monday it is too soon to determine whether omicron will harm production in Asia and elsewhere.
Mr. Kouvelis said the delta variant, which wreaked havoc in Vietnam and Malaysia, hit the global supply chains, driving up the price of clothing.
“If omicron goes to Southeast Asia we are going to be in serious trouble because that is where we are getting most of our goods from,” he said.
Despite the alarm bells, Mr. Biden and the business leaders struck an upbeat tone at the White House.
Food Lion CEO Meg Ham described her company’s supply chain as “strong and robust,” adding there is “ample product” in the stores.
Ms. Ham credited the company’s own supply chain and partnerships with vendors and farmers to keep fresh food and produce in its stores.
Walmart CEO Doug McMillon predicted the retailer will have “a really good holiday season.”
“Our inventory levels are up more than 10%,” he said. “While we’re all concerned about the supply chain, we have more inventory than we did a year ago and have the inventory that we need to be able to support the business.”
While Mr. Biden steered clear of the supply chain bottlenecks in his remarks, he did tout the surge in Black Friday sales, which were artificially depressed last year because of the pandemic.
Black Friday sales increased 29.8% over last year, according to data from Mastercard. The credit card company said e-commerce sales grew 10.6% from last year, while in-store sales were up 42.9%.
As consumers grapple with increased prices everywhere from the grocery store to the gas station, Mr. Biden has found himself battered by both sides of the aisle.
Rep. Abigail Spanberger, Virginia Democrat, last week urged Mr. Biden to appoint a supply chain czar to manage the government’s response to the crisis.
“[S]upply chain disruptions, shortages and increased prices loom large over too many families sitting at dining room tables,” Ms. Spanberger wrote. “And with the holidays around the corner, my constituents are concerned about whether they will be able to purchase gifts that arrive in time for Christmas. More must be done to address this crisis at all levels of government.”
Meanwhile, Rep. Cindy Axne, Iowa Democrat, rolled out four bills this month to address the congestion, including one that would create a nonpartisan commission to identify weaknesses in the supply chain.
The rising prices have offered Republicans heavy ammunition as they try to scuttle Mr. Biden’s $1.7 trillion climate and social spending bill that cleared the House this month. The bill now faces more acrimonious debate in the Senate.
At a press conference last week to highlight the rising cost of Thanksgiving under Mr. Biden, Republican senators blasted Democrats for reckless spending and failing to address the supply chain crisis.
“The problem is nothing’s being done. No pathway is set by Democrats in Congress,” Sen. John Boozman of Arkansas, the top Republican on the Senate Agriculture Committee, said at the press conference.
In August, the White House announced a Supply Chain Disruption Task Force. Based on its recommendations, Mr. Biden announced in October that the Port of Los Angeles would operate around the clock, and companies including Walmart, UPS and FedEx would expand working hours to relieve shipping backlogs.
Earlier this month, the administration announced it would address immediate supply chain challenges by spending $4 billion to reconfigure coastal ports to make it easier to transport goods. The construction is expected to begin within the next 60 days.
The administration also plans to prioritize $3.4 billion in upgrades to obsolete inspection facilities to make international trade more efficient at the northern and southern borders.
White House officials also announced plans to standardize data-sharing requirements for shipping lines, terminal operators, railroads, trucks and warehouses.