LM survey takes a look at impact of federal government shutdown on logistics operations

About two weeks ago, I thought it would be a good idea to send out a research “blast” survey to LM readers about the Federal Government shutdown, which was in its third week at that time. I looked forward to seeing the results on various fronts to see if we could glean some additional insights, specifically, in terms of how the shutdown was impacting logistics and supply chain operations.

When we sent the shutdown blast out, many people, including myself, were under the impression that the shutdown could last for several more weeks or months. But, as it turned out, on the day I received the survey’s results, President Trump announced that a three-week deal to re-open the government through February 15, had been reached. So, while the timing may have not have synched up exactly, the results were still pretty interesting, in that the number of respondents who maintained their respective business operations were not largely impacted by the shutdown were in the majority.

Here is a look at the results, which help to drive that point home:

• of the 194 respondents, 32.5%, or 63 respondents, said their business and logistics operations were being impacted by the shutdown, while 131 respondents, or 67.5%, said there was no impact;
• from a timing perspective, 18.1%, or 35 respondents, expected the shutdown to last four weeks, 45.1%, or 87 respondents, expected it to last four-to-eight weeks, and 36.8%, or 71 respondents, expected it to last more than eight weeks; and
• had the shutdown, in fact, gone on for several more weeks, at the time of this research, 29.9%, or 58 respondents, said they would have needed to adjust business and logistics operations or strategies, with 70.1%, or 136 respondents, indicating no changes would have been necessary

The ways in which the shutdown impacted operations for respondents varied, with respondents citing things like: delayed importation due to port congestion; a slowdown in business; orders and shipments being returned due to not knowing  which customers facilities are closed because of the government shutdown; changing production runs, orders and trying to find more warehouse space to hold finished good that should have shipped already; increased port congestion due to Customs delays; exports from the U.S. needing Government certificates; a reluctance to commit to contracts; 2019 tariffs for Customs have not been updated, accessibility to the government agencies websites and/or them not being updated leaves some holes in the process and pending renewals of confidentiality on manifests that aren't being addressed and will put shipper information out regarding shipments that it wishes to keep confidential for competitiveness; pending rulings, anti-dumping issues and other regulatory issues that are not moving forward; and a lack of inspectors at the Mexico borders causing a delay in Jalapeño peppers getting across resulting in higher prices.

While the number of respondents negatively impacted by the shutdown was in the minority, this list is still pretty long to say the least. And while the shutdown is now over, that, by no stretch means that it will not rear its ugly head again, with, perhaps another one looming should Congress and the President not be able to work out a deal.

Let’s hope that another shutdown is not around the corner in mid-February. But who knows, to be honest? With political acrimony and dysfunction at perhaps an all-time high, it appears nothing is off the table, at this point, in terms of possible outcomes.

What’s more, over the 35 days of the shutdown, things from an economic perspective consistently got worse by the day, it seemed. Need proof? Well, consider that, White House economists estimated that each week of the shutdown cost the U.S. economy 0.13%, in terms of economic growth, which was twice of what was originally estimated, according to various reports. And consumer confidence, which can be viewed as somewhat of a “quirky” indicator, also stumbled to low levels over the course of the shutdown.

Neither of these points can be viewed as encouraging, to be sure, so we will have to be patient, as difficult as that may be, between now and mid-February to see what happens. Here is to hoping that a deal is reached, and that the difficult, and largely politically motivated events and reasons that led to the shutdown fade away.