Supply chain problems crippling US businesses as inflation spikes amid ‘dire’ worker shortage

National News

MINNEAPOLIS (AP/WNCN/CBS Newspath) — Supply chain woes are crippling businesses both large and small.

Earlier this week a panel on Capitol Hill heard the concerns of some business leaders including two Minnesota companies.

Businesses described a whole slate of problems from worker shortages, increasing costs for shipping and supplies and skyrocketing demand that’s putting pressure on the transportation of goods.

Minnesota Congressman Dean Phillips chaired the House hearing Wednesday, seeking input from the very people impacted by the global supply chain challenges.

The shortage on shelves across the county comes as prices are rising in shipping costs.

At this time last year, ocean freight rates from China to the U.S. West Coast were $3,847 per 40-foot container. Now, the same container will cost $17,377 to ship, according to Freightos, a Hong Kong-based online freight marketplace.

The average time it takes for ocean freight to go door-to-door has increased 45% over the last year, from 51 days to 74 days, according to Freightos. Ports in Los Angeles and Long Beach, California, account for 40% of all shipping containers entering the United States. As of Monday evening, 73 container ships were at anchor, waiting to unload.

Normally, there’s no wait for container ships to unload, said Kevin Ketels, a lecturer in global supply chain management at Wayne State University.

“These are major delays,” he said.

Two Minnesota businesses – logistics company C.H. Robinson in Eden Prairie and Maud Borup, a candy and food gift company in Plymouth — spoke about the problems

A top executive at CH Robinson underscored the truck driver shortage – some of which pre-dated the pandemic. He suggested expanding training and incentives for workers that boost the quality of life.

Maud Borup detailed a “dire” worker shortage – saying that they were down 100 people. Even with a 36 percent salary bump – it’s not helping.

“The situation is so severe that despite a purchase of six acres of land adjacent to our lot, our business has to put expansion plans on hold. Our desire is to continue to operate in our corner of Minnesota, where our current workforce shortages are unsustainable,” said Christine Lantinen, president and CEO of Maud Borup.
The global supply chain has been buffeted by a multitude of problems, from factories having to close due to COVID-19 surges, a lack of containers to ship items in, backups at ports and warehouses, and a shortage of truckers.

While bigger retailers like Walmart and Target have the power to buy their own containers, use air freight and take other steps to make sure they get inventory, smaller retailers are at the mercy of their vendors, who are increasingly suspending delivery guarantees and sometimes not communicating at all.

Last year, Renee Silverman, owner of Irv’s Luggage in Vernon, Illinois, didn’t buy luggage ahead of the holidays – no one was traveling. This year, people are traveling and in need of luggage – but now the problem is finding luggage to sell them.

Inventory that was supposed to come in August and September has been pushed back to December due to supply problems. Silverman has tried spreading orders between five or six vendors, such as Samsonite and Ricardo Beverly Hills.

The shortage in products comes as the cost of supplies to build is increasing.

One Florida homebuilding small business owner testified this week that usually they get notices from suppliers of price increases once a year.

Now he says those notices come every week.

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