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Local Chamber shares concerns over supply chain challenges

Chamber of Commerce chair Ella Gurr
It is causing severe shortages worldwide in many industries
reporters@samoanews.com

Pago Pago, AMERICAN SAMOA — The American Samoa Chamber of Commerce has passed along to the COVID-19 Task Force a wide range of information regarding “supply chain challenges” as world economies reopen following more than a year since the global shutdown caused by the coronavirus pandemic. And the chamber is recommending an “ASG -Community Food Security & Supply Vulnerability Assessment”.

Chamber chairperson, Ella Gurr provided a bullet-point summary of the volatility and complexities of the challenges which are contributing to supply chain problems, in a May 13th communiqué to task force chairman, Lt. Gov. Talauega Eleasalo Ale, who is also the Governor’s Authorized Representative.

“Supply chain challenges worldwide are causing severe shortages to many industries,” Gurr wrote. “As the world’s economies are reopening, demand is spiking with a massive amount of orders being placed in Asia to restock retail and distributor shelves.”

She explained that there’s “no clear timeline to normalcy, however most economists expect this situation to last through the summer and some believe through the end of the year.”

On Import Challenges, Gurr cited five specific issues. For example, container shortages are causing delays to ship products. “Many more containers have shipped to USA and Europe then are shipping back to Asia. Further, labor shortages at USA and European ports are causing slowdowns in unloading containers.”

Another example, she said, is cost increases in the form of surcharges to freight from China that “have skyrocketed lately due to fewer container spots on ships. Additionally, Amazon, Walmart and other giant retailers are buying up most available container space causing shortages for container space on ships for all others.

Another challenge — India’s recent COVID-19 spike is causing shutdowns in that country and resulting in manufacturing demand increases to China and more pressure on the freight issues.

Gurr explained that India supplies 40% of global market generic pharmaceuticals, and shutdowns will impact supply of medicine to the U.S. and American Samoa markets.

Two other import challenges cited in the letter:

•           the recent back-up at the Suez Canal sea-level waterway in Egypt caused a domino effect holding up hundreds of ships and resulting in major congestion at ports around the world and adding to the container deficit.

•           Mississippi River Closure in Memphis causing over 700 barges stranded cutting off the biggest route for U.S agriculture exports.

For “US Domestic challenges”, Gurr cited that states opening up have resulted in product demand skyrocketing; truck driver shortages are resulting in longer lead times and higher wages to hire drivers; labor shortages due to COVID concerns and/or stimulus packages; and corrugated box price increases and extended lead times are slowing product production.

Additionally, domestic manufactures cut back on inventory levels due to COVID related drops in business which caused tighter cash flow as they are now trying to replenish. Furthermore, domestic manufactures not investing in plant and equipment due to low margins thus supplementing inventory with imports, further driving demand and US import dependency.

Gurr also shared with Talauega additional contributing challenges:

•           Raw material price increases in pulp and aluminum foil roll stock are adding to pricing pressures.

•           Concerns of future deflation related to potential overstock of high-priced inventory by worldwide vendors further contributed to lower inventory levels — an example is the disposable masks’ price volatility in  2020.

•           Building material price increases. For example lumber has increased an astounding 375% between April 2020 and April 2021 and still continues to climb as demand continues to ramp up.

Gurr provided in the communiqué to Talauega the source of the data in the Chamber letter as well as online links to articles and videos describing the situations in greater detail.

The Chamber recommends an “ASG -Community Food Security & Supply Vulnerability Assessment”. For example, monitor food security levels in American Samoa on imports and local produce, identify minimum and maximum inventory for short and long-term stock levels and sustainability.

Also evaluate medical supplies and pharmaceutical drugs available to determine minimum and maximum stock levels. With “India’s COVID crisis, the largest provider of generic pharmaceutical drugs globally and 40% of market  supply to USA, indicates India significant footprint to the drug industry, critical to monitor local supply,” the Chamber said.

Also being recommended is to “Monitor & Implement strategy for building material/supplies/labor to account for construction boom and  local market infrastructure plans”.

“The Chamber is working diligently to meet these challenges and find alternative solutions where necessary, partnering with ASG is pertinent efforts for food & supply security,” Gurr said.

Samoa News is also being affected by supply chain challenges, with newsprint now in a 2-week delay due to shipping delays, and supplies brought in from the East Coast delayed due to coast-to-coast slow downs. Mail is still problematic as well for receiving goods as it relies on a one cargo flight delivery, and is backed up.