The shipping and supply chain drama driving backlogs and bottlenecks over the past many months prompted two national retail and apparel trade groups to urge the government for action.
In a letter to the White House Monday, the National Retail Federation (NRF) requested a meeting with President Biden and other administration leaders to discuss the ongoing challenges leading to port congestion, higher freight rates and more.
“The congestion issues have not only added days and weeks to our supply chains, but have led to inventory shortages impacting our ability to serve our customers,” the letter from NRF president and CEO Matthew Shay said. “In addition, these delays have added significant transportation and warehousing costs for retailers.”
As the country’s largest private-sector employer, retailers depend on U.S. ports and other transportation infrastructure to deliver billions of dollars’ worth of goods and products to consumers every day, NRF said. Last week, it revised its annual retail sales forecast to grow between 10.5 percent and 13.5 percent to more than $4.44 trillion in 2021 as the economic recovery accelerates.
The American Apparel & Footwear Association (AAFA) also issued a missive to Biden on Tuesday regarding the ongoing shipping crisis that is disrupting the American economic recovery. Backups at American ports continue to disrupt supply chains, while additional disruptions such as the lack of shipping containers, skyrocketing shipping prices, and a long-term trucker shortage have amplified the impact, AAFA said.
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Although consumer demand continues to grow, evidenced by imports during the busiest April on record at the largest U.S. retail container ports, the supply chain challenges remain significant. According to the Global Port Tracker, produced by NRF and Hackett Associates, imports at the largest U.S. retail container ports saw their busiest April on record and May could turn out to have set a new all-time record as vaccines allowed consumers to return to normal shopping patterns.
“There’s no shortage of demand from consumers, but there continue to be shortages of labor, equipment and shipping capacity to meet that demand,” Jonathan Gold, NRF vice president for supply chain and customs policy, said. “Supply chain disruptions, port congestion and rising shipping costs could continue to be challenges through the end of the year.”
U.S. ports covered by Global Port Tracker handled 2.15 million 20-foot containers or equivalent units (TEU) in April, making it by far the busiest April documented and an increase of 33.4 percent from a year earlier, when most stores were closed by the coronavirus pandemic. April’s results followed 2.27 million TEU in March, which had set the record for the most containers imported during a single month since NRF began tracking imports in 2002.
For May, Global Port Tracker projected a year-over-year increase of 51.1 percent to 2.32 million TEU reaching ports, beating March’s total to set another new record for the largest number of containers in a single month.
“Supply chains are finding it difficult to keep up with demand as shipping capacity struggles,” Hackett Associates founder Ben Hackett said. “A number of vessels taken out of service when volumes were low remain in drydock, while others are delayed in congested ports, which face a lack of manpower both because of COVID-19 illnesses and the tight labor market. Many people remain hesitant about returning to work, affecting ports, rail, trucking and distribution centers.”
In a recent survey of NRF member companies on the congestion situation, over 97 percent of retailers surveyed say they have been impacted by port and shipping delays.
“In many instances retailers will absorb these costs and not pass them along to consumers,” Shay said. “However, many smaller retailers may have no choice but to pass along these costs, especially as they face other challenges with reopening their businesses.”
AAFA requested that the Biden administration take several immediate steps to ease the crisis. These include coalescing key stakeholders–carriers, port authorities, terminal operators, truckers, shippers, rail operators–to negotiate solutions to this crisis and make sure all logistics rules and regulations are being effectively enforced.
It also called for offsetting spiraling costs by immediately removing the biggest single cost on the industry–tariffs–including the removal of punitive tariffs on imports from China and renewing the Generalized System of Preferences (GSP) program and the Miscellaneous Tariff Bill (MTB).
“Our industry is experiencing whopping increases in freight costs and historic shipping delays, which are already affecting the critically important back-to-school and holiday shopping seasons,” Steve Lamar, president and CEO of the AAFA, said. “We need to see action by the administration to investigate and end these pricing practices and direct relief to an industry that employs millions of Americans. Left unchecked, this crisis will continue to fuel inflation for consumers, limit our ability to supply and stock the goods that Americans want, and hobble our members’ ability, particularly small businesses, to keep Americans employed.”
Home Depot, one of the largest users of container freight in the U.S., is trying to take matters into its own hands in a move that should ensure reliable capacity for bringing in holiday merchandise.
“We have a ship that’s solely going to be ours,” Home Depot president and chief operating officer Ted Decker said in an interview with CNBC. “It’s just going to go back and forth with 100 percent dedicated to Home Depot.”
In his letter, Shay called for “strong leadership from the administration to galvanize attention to the current situation, as well as work to resolve long-standing issues that limit safe and efficient port operations.”
“As the administration undergoes supply chain reviews for critical sectors, including transportation, addressing the current state of our nation’s ports and freight movement needs to be a critical component of the strategy,” he added. “As trade continues to grow, we need to make sure we have truly 21st century ports and freight movement.”