The Impact and analysis of Sequestration on the United States Supply Chain

Write a 10 page paper, with references, using APA style for citations and references. Use a title page, an abstract and a reference page (not included in 10 pages).

Read the following and then compose a paper to address the questions at the end. You might consider the questions that are also presented in the narrative below. You must use least three references from peer reviewed journals or from federal agencies.

Sequestration: What does this mean to the general public? As the impacts of these drastic government spending cuts are happening, the typical citizen refers this as an issue for the military and for government, but with a nervous eye toward their own job security. The public sees the job cuts happening to the military and government officials without too much concern or fanfare. Given the recent issues and confusion with impact of the Fiscal Cliff, the typical consumer recognizes that spending cuts in these areas as a prudent move to reduce big government spending. However, what people do not see is the potential and real impact upon retail and stores that were poised to capture more of the consumer dollars given the sluggish recover to date.

Homeland Security has already issued a statement where they are putting companies on notice regarding these cuts. What it means is that people should expect that clearance for shipments coming in by sea or air could be delayed at the ports by up to five days. Now, this does not sound like too much of an inconvenience but keep in mind that this is an additional five day delay. This does not sound like much but keep in mind that is the projection now, during some of the slowest months of the year for shipments. If the average retailer can expect an additional five day delay now, one could wonder what the delay will look like when we approach the peak Christmas holiday season when shipments are at their traditional highest level. Will Homeland Security keep to an additional five day delay or will there be more delays in the future? Will these initial five days of delay compound additional delays as good and container so good keep coming into the ports and staking up? They could pile up.

The bigger picture is that delays of this nature tend to have that pile on effect. What this means is that if a ship is delayed for seven days, then the next sailing is delayed fourteen days. Then, the next sailing would be delayed twenty-eight days. Of course, if there is space to unload vessels for cargo inspection, then one might not see the same level of delays, however, as cargo piles up in the port there is only so much capacity there to accommodate all the delayed material. Eventually, there will not be any room to unload and cargo will be stuck on board and Homeland Security frantically tries to clear up this backlog of containers that are already piling up at the ports.

Retailers might resort to the extra expense of air cargo to reduce transit times, but air freight is expensive and even though the cargo will arrive faster, there are still going to be delays as Homeland Security needs to inspect and clear those shipments at the airports. Given that things are better economically, one should expect to see (and this is confirmed by projections by Homeland Security) that more imports are anticipated. We seem to see a crash at a cross roads. One road is a growing economy where people want to purchase more goods. The road cross that economic prosperity road is one of delays to meet that demand.

One might ask, “What about perishable products that are part of the cool supply chain?”, as an additional five day delay might limit the useful shelf life for some commodities. Will there be any accommodation for perishable goods or can the consumer expect that most produce will rot while awaiting inspection, driving costs ever higher? Should consumers expect that retailers will eliminate some perishable goods from their stores to avoid losing cargos or having to charge consumers prices that would be untenable in the marketplace? Will we have a banana shortage? Sequestration might become known as a banana gap. Should consumers expect some empty shelves while government looks for a better solution? Will cooler heads prevail in government and some kind of better resolution will be found to avert this retail crisis?

Some might ask, is technology the answer to making this process more efficient? Some might feel this is a possibility, but with the cuts as they are, there are no additional funds to look at a technical solution. Also, the Department of Homeland Security (DHLS) has not been very successful with technology. Many point to the Transportation Workers Identification Card (TWIC) as a new system that failed to deliver on its promise. The TWIC card was to unify ports throughout the US in a manner where only federally vetted individuals could transit through sensitive port areas. Automated card readers and other devices would secure port areas to keep enemies of the US from these sensitive areas. Only now, five years later, are some areas finally getting these security measures, while the identification cards have been required for five years by the government.

What is needed is a more efficient solution that encourages business partnerships with government such as programs like C-TPAT (Customs Trade Partnership against Terrorism). This is where government works with industry to avoid creating roadblocks that will ultimately slow down the economic growth by restricting retail operations. Another long term consideration is the impact of the expansion of the Panama Canal. The expansion product will allow larger ships to carry goods directly to East Cost US ports. This expansion will allow for larger ships to pass through rather than have to discharge on the West Coast of the US and then transported by rail to the Midwest and then by truck to all other markets. This expansion will allow significantly more sea cargo to pass to East Coast ports that will already be shorthanded for inspections due to Sequestration; an increase landed cargo, but locked into a overcrowded port.

Although, at the core, a cut to government spending is noble, but it is unclear if the Sequestration plan was well thought out to the complexities of the logistics and transportation systems that are the glue that holds American commerce together, and holds families access to the groceries and other purchases they need or think they need.



Is reducing the manning on the protection of inbound goods the right place to cut government spending?

Just as the economy appears to be recovering, should the government punish retailers and suppliers?

Do you think that Sequestration will remain in place for the foreseeable future?



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