Day 33 of the Government Shutdown & the Trickle Up Effect
Day 33. How much longer can this go on? Is the government shutdown hurting your business? Today many shippers are not seeing disruptions in their business because of the shutdown – but when they think about how much longer this shutdown can last, concerns begin to pop up in the minds of executives. The unknown can be scary.
Here are what people are saying about the shutdown in the media and what they believe will happen to businesses:
- Nationwide, Moody’s Analytics estimates the shutdown will slow economic growth by about 0.04 percentage points for every week that it lasts, which would crimp sales-tax collections for states and cities. This can “trickle up” to affect state agencies funded by the sales tax, which could hit many organizations’ budgets.
- Companies that ship globally will find a slowdown at the border because Customs & Border Protection agents are not being paid during the shut down and have been calling in sick and not going to work. With less personnel reporting to work, paperwork is piling up and border crossing lines are growing.
- If you are carrying products that require cold storage, make sure your trucks are in tip-top working order to keep products cold during longer wait times. For products with expiration dates, shippers should try to incorporate delays into overall shipping times to keep items within acceptance dates.
- There is a stronger chance for a disruption impacting Demurrage and detention penalties. Also expect back-ups at ports, borders and terminals to occur because of piles of delayed paperwork.
- The government shutdown affects how quickly chemical companies can get new chemicals approved and on the market. The EPA chemicals review process takes time even when the government is open.
- Long term, it is going to fracture the infrastructure for both ocean and air, regulatory and clearance. If paperwork begins to clog up in the system, the results could be dire, Mr Jon Slangerup, CEO of American Global Logistics warned, possibly as bad as the system meltdown in 2014 that paralyzed container ports on the US west coast. At the peak of that crisis, the toll this took on the economy amounted to $1 billion a day, and it took over four months to recover .
Basically, the longer the government shutdown continues, the greater potential for a disruption to occur somewhere along the supply chain.
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Being prepared is the best way for your business to continue running smoothly. When the government shutdown begins to trickle up to touch your business, you will be able to proactively meet your customers’ needs and keep business running as usual.