The global supply chain crisis is difficult to solve, and the United States has to use the National Guard to unload goods and drive trucks

Reporter | Tian Siqi

Against the backdrop of more and more countries ending the COVID-19 lockdown period and increasingly recovering economic activity, factors such as surging consumer demand, worker shortages and inadequate preparation of manufacturers have led to a global supply chain crisis. Many goods are piled up in the harbor because of a lack of enough trucks to transport them away, making it difficult to board supermarket shelves in time.

In response, people familiar with the matter told the Washington Post that White House officials have discussed the deployment of the National Guard in recent weeks to solve the backlog in the supply chain. For example, in the case of a shortage of operators, security guards may be able to drive trucks to transport, help unload goods at ports, etc.

People familiar with the matter stressed that while this idea seems unlikely to materialize at the moment, it reflects that the U.S. government has seriously considered using government resources to mitigate the supply chain crisis. Previously, the American Clothing and Footwear Association had sent a letter to the Biden administration, which mentioned the use of the National Guard to help unload goods and drive trucks.

As the year-end holiday season approaches, many retailers and manufacturers warn that supply chain crises could lead to shortages of goods in stores and shrinking discounts. Reuters reported that many companies have had to raise the price of necessities such as diapers and bottled water to compensate for the rising costs of raw material manufacturing and transportation.

World Trade Organization (WTO) Director-General Ngozi Okoncho Iweera said at a forum that global supply chain problems could persist "for months" because shipping companies did not anticipate the strength of the recovery. "They've reduced the supply of containers, and those containers have been put in the wrong places, so there's a shortage of containers right now."

But businesses seem to place more emphasis on obstacles to land transport. European food conglomerate Danone warned in a sales call with analysts on October 19 that the price of its goods will rise in the future, and the main culprit is the trucking problem. Procter & Gamble also said operating margins were squeezed in the first quarter, expecting spending to reach about $2.3 billion this fiscal year, more than the previous forecast of $1.9 billion.

Ian Wright, chief executive of the British Food and Drink Federation, told the Business, Energy and Industrial Strategy Committee of the house of commons in the country: "Six months ago, our businesses thought it was temporary, and now every business I know says this (supply chain crisis) will continue into 2023 and 2024. ”

Kristina Hooper, chief global market strategist at Invesco, noted last week that rising costs often have a greater impact on companies with lower profit margins, covering industries such as transportation, retail, construction and automotive. The less affected companies are those with higher profit margins and limited raw material costs, such as growth industries such as technology and healthcare.

Tim Uy of Moody Analytics said supply chain issues "will get worse before they get better" because "border controls and movement restrictions, the lack of global vaccine passes available, and the lack of a global vaccine pass, trapped in our own country, and pent-up demand combine to create a perfect storm in which global production will be hampered." Untimely deliveries will lead to higher costs and prices, and global GDP growth will become less robust. ”

There are also some company management and analysts who believe that the worst is coming to an end.

JPMorgan Chase CEO Jamie Dimon said on an earnings call last week that supply chain woes will be a distant memory this time next year. Citi analyst Christian Wetherbee said in a report last week: "The problem of cargo congestion may have crossed its peak, and both liquidity and trading volumes are likely to increase." ”

Jefferies analysts said in a recent report that "global supply chains have been in a very fragile state", but "we may have seen the worst-case scenario" and by the first half of 2022, "the impact may ease".