California shipping backlog hits manufacturing businesses
One Las Vegas manufacturer is raising prices to cover increased costs
Manufacturing businesses hit by shipping backlog
The shipping backlog at the California ports is starting to affect manufacturing businesses.
From toilet paper to toys, products are stuck on tens of thousands of shipping containers at the Los Angeles and Long Beach ports.
Manufacturing companies are just now starting to feel the pressure after months of this shipping backlog.
Spacecraft Components in Las Vegas manufactures products for industrial companies across the U.S. But some of its components are sitting on a ship in California, forcing it to change how it operates.
The same materials made overseas may cost about 75 cents, compared to $3.50 made in the U.S., according to Craig Wiseman, Spacecraft Components' president and co-owner.
The family-owned business imports some materials from countries like China, Vietnam and India.
Spacecraft Components imports some of their materials from countries like China, India and Vietnam. Outsourcing helps keep costs low. (Ashley Soriano/Fox Business)
Outsourcing helps keep costs low, but with the shipping backlog, the wiseman says he has to make more products in house.
"So while some of my product [from overseas] is stuck on a ship at sea right now, I’m able to run them here, but it takes my 75 cent cost and quadruples it to a much higher price."
RECORD BACKLOG OF CONTAINER SHIPS HITTING THE US
Railway companies are among Spacecraft Components' biggest customers.
"We’re not shipping some of their product so that’s putting new cars that belong on the tracks behind so some of the larger transit authorities back East, such as New York City Transit and Chicago Transit, can’t get new cars or get parts to repair cars," Wiseman said.
Stephen Miller, an economics professor at the University of Nevada-Las Vegas, says the shipping backlog is a direct result of the COVID-19 pandemic: There isn’t enough manpower to clear the goods off the ships, and there’s a shortage of long-haul truck drivers.
"This is not something we’ve seen before," Miller said. "Think of an economy as working smoothly and operating nicely, so the supply chain is operating efficiently. And then boom the bottom drops out of the economy."
SHIPPING BACKLOG ADDING TO US SUPPLY CHAIN DELAYS
For Spacecraft Components, the products stuck on ships means buying more expensive materials made in the U.S., importing goods by air rather than by sea and raising prices to cover the difference.
It is also eliminating jobs and switching to self-operating machines in order to cut back on costs.
The shipping backlog is now hitting Spacecraft Components. They are having to make some products in house that they would have previously imported. (Ashley Soriano/Fox Business)
"We’re too dependent on items offshore, and I think the consumer -- me included -- is feeling the pinch all across the board from both material costs going up and shortages," Wiseman said.
Last week, President Biden announced that the ports would open 24/7.
But economists say the supply chain takes time to adjust, and they will be looking at the data for years to come.
On the East Coast, the Savannah, Georgia, port is also dealing with a backlog. Meanwhile, the ports in New Orleans and Charlotte, North Carolina, are not facing as much as a backlog as the California ports.
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Fox News' Leslie Dominque contributed to this story.