It isn’t just the UK that’s suffering supply chain issues. In the US, the crisis may last until the summer
The backlog of cargo ships at the busiest port complex in the US – images of which have come to define the global supply chain crisis – is unlikely to return to normal before next summer.
The executive director of the Port of Long Beach in California says plans to switch to 24/7 operations, pushed by President Joe Biden this week, will improve the crisis in the short term but that logistics globally need a rethink.
Long Beach and the neighbouring port of Los Angeles are the two busiest in the US – and for weeks now, container ships, often as many as 70 at a time, have been forced to wait at anchor offshore for a berth.
Mario Cordero has met with the US president to push for ways to unclog the backlog
The post-pandemic surge of trade combined with labour shortages has created bottlenecks at key logistics hubs around the world and raised concerns about more product shortages.
Mario Cordero, who met Mr Biden this week as the White House pushed for ways to unclog the backlog, told Sky News: “Everybody agrees we’re in a crisis, everybody agrees we need a solution, so the question is what are the short-term solutions, what are the long-term solutions?
“What’s important is that we cannot be in this situation next time there’s an unforeseeable event.”
Not surprisingly, many of the issues facing the supply chain industry in the US are the same as those being seen in the UK and Europe. There is a shortage of truck drivers and delays caused by the logjam are costly.
At a truck stop close to the Port of Long Beach, one trucker said: “Sometimes some drivers get mad, I understand that because I am one of them. We try to do our job the best we can but we’re wasting too much time inside, like five or six hours waiting for one load.”
Truck drivers are having to wait double the amount of time than unusual to pick up one load at the Port of Long Beach
That is double the time they would usually wait, he said, and can make the difference between drivers making one load or multiple loads in a day.
With the holiday season approaching, business and customers are becoming nervous at the possibility of shortages for Christmas.
“Ordering, ordering, ordering,” is how Lisa McHenry, who runs the Knock Knock toy and gift shop in Seal Beach, says she has approached the crisis.
“Ordering early and ordering deep because you don’t know if some items are not going to come in, so you’re just ordering heavy on some things and just hoping something comes in.”
Bottlenecks have been created at key logistics hubs around the world
The phone calls have not stopped from those hunting elusive toys. “It is floating on a ship somewhere,” she told one caller. “The tooth fairy will have to leave an IOU.”
Some large US retailers have considered chartering their own container ships which could dock and unload at smaller ports. Guaranteeing their supplies would come at a cost though and that is likely to be passed on to their customers.
This week, Mr Biden touted 24/7 operations at major ports as a first step to dealing with the crisis. But he added: “We need the rest of the private sector chain to step up as well.”
The cyber attack on Jaguar Land Rover (JLR), which halted production for nearly six weeks at its sites, cost the company roughly £200m, it has been revealed.
Latest accounts released on Friday showed “cyber-related costs” were £196m, which does not include the fall in sales.
Profits took a nose dive, falling from nearly £400m (£398m) a year ago to a loss of £485m in the three months to the end of September.
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Revenues dropped nearly 25% and the effects may continue as the manufacturing halt could slow sales in the final three months of the year, executives said.
The impact of the shutdown also hit factories across the car-making supply chain.
Slowing the UK economy
The production pause was a large contributor to a contraction in UK economic growth in September, official figures showed.
Had car output not fallen 28.6%, the UK economy would have grown by 0.1% during the month. Instead, it fell by 0.1%.
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How cyber attack ‘effectively hacked GDP’
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Reacting to JLR’s impact on the GDP contraction, its chief financial officer, Richard Molyneux, said it was “interesting to hear” and it “goes to reinforce” that JLR is really important in the UK economy.
The company, he said, is the “biggest exporter of goods in the entire country” and the effect on GDP “is a reflection of the success JLR has had in past years”.
Recovery
The company said operations were “pretty much back running as normal” and plants were “at or approaching capacity”.
Production of all luxury vehicles resumed.
Investigations are underway into the attack, with law enforcement in “many jurisdictions” involved, the company said.
When asked about the cause of the hack and the hackers, JLR said it was not in a position to answer questions due to the live investigation.
A run of attacks
The manufacturer was just one of a number of major companies to be seriously impacted by cyber criminals in recent months.
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Are we in a cyber attack ‘epidemic’?
High street retailer Marks and Spencer estimated the cost of its IT outage was roughly £136m. The sum only covers the cost of immediate incident systems response and recovery, as well as specialist legal and professional services support.
The Co-Op and Harrods also suffered service disruption caused by cyber attacks.
Four people were arrested by police investigating the incidents.
Sir Keir Starmer and Rachel Reeves have scrapped plans to break their manifesto pledge and raise income tax rates in a massive U-turn less than two weeks from the budget.
The decision, first reported in the Financial Times, comes after a bruising few days which has brought about a change of heart in Downing Street.
Read more: How No 10 plunged itself into crisis
I understand Downing Street has backed down amid fears about the backlash from disgruntled MPs and voters.
The Treasury and Number 10 declined to comment.
The decision is a massive about-turn. In a news conference last week, the chancellor appeared to pave the way for manifesto-breaking tax rises in the budget on 26 November.
She spoke of difficult choices and insisted she could neither increase borrowing nor cut spending in order to stabilise the economy, telling the public “everyone has to play their part”.
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‘Aren’t you making a mockery of voters?’
The decision to backtrack was communicated to the Office for Budget Responsibility on Wednesday in a submission of “major measures”, according to the Financial Times.
The chancellor will now have to fill an estimated £30bn black hole with a series of narrower tax-raising measures and is also expected to freeze income tax thresholds for another two years beyond 2028, which should raise about £8bn.
Tory shadow business secretary Andrew Griffith said: “We’ve had the longest ever run-up to a budget, damaging the economy with uncertainty, and yet – with just days to go – it is clear there is chaos in No 10 and No 11.”
How did we get here?
For weeks, the government has been working up options to break the manifesto pledge not to raise income tax, national insurance or VAT on working people.
I was told only this week the option being worked up was to do a combination of tax rises and action on the two-child benefit cap in order for the prime minister to be able to argue that in breaking his manifesto pledges, he is trying his hardest to protect the poorest in society and those “working people” he has spoken of so endlessly.
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Ed Conway on the chancellor’s options
But days ago, officials and ministers were working on a proposal to lift the basic rate of income tax – perhaps by 2p – and then simultaneously cut national insurance contributions for those on the basic rate of income tax (those who earn up to £50,000 a year).
That way the chancellor can raise several billion in tax from those with the “broadest shoulders” – higher-rate taxpayers and pensioners or landlords, while also trying to protect “working people” earning salaries under £50,000 a year.
The chancellor was also going to take action on the two-child benefit cap in response to growing demand from the party to take action on child poverty. It is unclear whether those plans will now be shelved given the U-turn on income tax.
A rough week for the PM
The change of plan comes after the prime minister found himself engulfed in a leadership crisis after his allies warned rivals that he would fight any attempted post-budget coup.
It triggered a briefing war between Wes Streeting and anonymous Starmer allies attacking the health secretary as the chief traitor.
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Wes Streeting: Faithful or traitor? Beth Rigby’s take
Read more: Is Starmer ‘in office but not in power’?
The prime minister has since apologised to Mr Streeting, who I am told does not want to press for sackings in No 10 in the wake of the briefings against him.
But the saga has further damaged Sir Keir and increased concerns among MPs about his suitability to lead Labour into the next general election.
Insiders clearly concluded that the ill mood in the party, coupled with the recent hits to the PM’s political capital, makes manifesto-breaking tax rises simply too risky right now.
But it also adds to a sense of chaos, given the chancellor publicly pitch-rolled tax rises in last week’s news conference.
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