A better solution to the supply chain crisis
Martin Dresner, professor of logistics, business and public policy at the Robert H. Smith School of Business at the University of Maryland, is available to reporters and can expand on his comments below by describing the factors and solutions to the supply chain crisis and how White House intervention is preferable through long-term planning and infrastructure spending.
Dresner says the pandemic “has created increased demand for products shipped from Asia arriving by container at major US ports, putting pressure on shipping, port, road and rail capacity.”
Meanwhile, labor rules designed to curb the spread of the coronavirus and some port closures have reduced throughput in the shipping industry, especially in Asia. This was accompanied by a decline in the workforce as people retired or left lower paying jobs, including transportation and warehousing positions. And, finally, government policies have injected considerable liquidity into the economy, increasing consumer spending, thereby further increasing the demand for consumer goods. “
“The president proposes to make better use of our current infrastructure by increasing working hours and distributing business more evenly throughout the day. … While it may help at the margin, there is only limited warehouse, rail and trucking capacity. It is difficult to expand this capacity in the short term. Although the arrears will eventually clear the system, it may take some time. “
The White House has said that if necessary, it will take an active role in resolving the crisis and call on the private sector to step up. But federal support is best channeled through infrastructure spending. “In the long term, better infrastructure should improve the functionality of supply chains. “
In the short term, it is better to leave the arrears to companies to settle. Prices are already adjusting and these prices will lead to adjustments in consumer demand, and higher interest rates, if they were to occur, will also reduce consumer demand. “