Impact of Partial Government Shutdown on the U.S. Supply ChainWill the U.S. Supply Chain Be Impacted by the Government Shutdown?
What is a government shutdown?
According to U.S. law,
When portions of the government do not receive funding authorization, the federal agencies are forced to suspend operations. Federal workers are furloughed or sometimes may be required to work without being paid. As many workers live from paycheck to paycheck, there tends to be substantial absenteeism during government shutdowns as furloughed workers are forced to take on temporary
The entire federal government can never shut down entirely. Because some major federal programs are deemed mandatory spending. This includes the military (with the exception of the Coast Guard), Social Security and Medicare. For military veterans, disability and retirement payments made by Veteran’s Affairs are not suspended by a government shutdown. New applicants for these federal programs may be forced to wait for assistance and service during a government shutdown, however.
What federal agencies are impacted by the current partial government shutdown?
- Housing and Urban Development
- Homeland Security
Current estimates identify approximately 800,000 federal workers and 500,000 contractors as being impacted by the government shutdown. In addition, there is a domino
How the Partial Government Shutdown Impacts the United States Supply Chain
Here is a brief look at how some federal government agencies are affected during the current government shutdown.
Department of Commerce
Data will not be published on matters such as trade, gross domestic product, housing construction
Only operations deemed essential for safety or emergency programs are currently in operation.
Department of Agriculture
Workers can continue operations at the Animal and Plant Health Inspection Service due to user fees and trust funds. This enables continued inspection for pests in fruit, vegetables
Farmers and agricultural businesses are frustrated by the lack of
In the short term, meat, poultry
Department of Transportation
Most agencies within the DOT can continue operations using carryover funding. Services such as air traffic control, field inspections and security operations overseen by the Federal Aviation Administration will continue to be provided.
Most of the federal agencies which work hand-in-hand with state DOTs are able to continue operations due to a different funding structure. Agencies which work collaboratively with or which operate within the federal DOT that are open during the government shutdown include the Federal Highway Administration (FHWA), U.S. Army Corps of Engineers and National Highway Traffic Safety Administration (NHTSA).
If the shutdown of the government continues, rulemaking from the Federal Motor Carrier Administration (FMCA) involving new proposals for Hours of Service may be impacted.
Department of Homeland Security
The customs clearance for cross border freight is one of the issues involving the supply chain that seems the most likely to be affected by the partial government shutdown. The customs clearance process relies on approval from government agencies involved with Customs and Border Protection (CBP), which currently remains unfunded. Customs officers are considered essential operational personnel, however, agencies that partner with CBP including the U.S. Environmental Protection Agency and U.S. Department of Agriculture are largely shut down, delaying clearances. This is likely to delay cross border freight shipments.
In addition, C-TPAT security validation visits and processing are not continuing during the government shutdown. Deadlines are being enforced for the trade community,
Operations of the FMS are on hold due to the government shutdown. An independent regulatory and enforcement agency, the Federal Maritime Commission helps to ensure “reliable international ocean transportation supply system that supports the U.S. economy”. Developed to help ensure the integrity and security of the U.S. supply chain and transportation system, the FMC helps to resolve cargo disputes, investigate complaints including those of Shipping Act violations; license shipping companies; hold entities responsible for mislabeled cargo shipped from or to the U.S.
Risks to the Supply Chain Related to the Partial Government Shutdown
Food Safety due to Reduced or Suspended Food Inspections
On Tuesday, January 15th the Food and Drug Administration (FDA) resumed some food safety inspections. Suspended since the government shuttered operations on December 22nd, food safety inspectors are working without pay. According to FDA Chief Scott Gottlieb, 31% of the FDA’s inventory of U.S. inspections are in the high-risk category, including but not limited to domestic surveillance inspections involving seafood, bakery products filled with custard; soft and semi-soft ripened cheese and cheese products, infant formula, sandwiches, fresh and processed fruits and vegetables.
The incidence of
Organizations encompassed within the Department of Homeland Security, including but not limited to the new Cybersecurity and Infrastructure Security Agency that was launched in November are operating with skeleton crews. This is of major concern as malicious actors will have more opportunities to execute cyberterrorism operations and malicious infrastructure needed for future
Supply Chain, Freight Transportation
and Logistics Planning
The lack of accurate, timely information is chipping away at the effectiveness of planning for the future. In today’s extraordinarily fast world, the lack of
Various government agencies track elements that are tied into U.S. supply chain and logistics. From statistics involving new home sales, construction spending, agricultural prices
Supply Chain Disruption
Numerous agencies are specifically involved with regulating freight movement, transportation and logistics
Customs Service Slowdowns
- Because the CBP will not be fully functional during the shutdown, Customs broker licenses, permits
andfiler codes will not be issued
- Allegations of trade fraud will not be responded to or reviewed
- Trade data requests including commercial requests for ITRAC information will not be processed for response
Slowdowns in Customs Clearance for Specific Goods
- This includes pharmaceuticals and medical devices, food products and goods that require certification and documentation, field examinations and sample collections by agencies such as EPA, FDA
Backups and Congestion: Land, Sea
- Delays to and unevenness in the clearance process
With a temporary funding solution blocked by the White House, social media has been buzzing with stories about the impact of the government shutdown on federal workers and the economy. What does the government shutdown mean for supply chain management? While it initially is not anticipated to have a major impact on consumers, federal government agencies such as the Department of Transportation are largely shuttered although some operations may be functioning.
For businesses that are concerned about cybersecurity and risk management, there is
Recently during the government shutdown, the White House has acted to bring some federal workers back to work, but unpaid. From concerns about the slowdown of ocean freight and trade to that of inventory management, the supply chain industry remains open for business but worried about the impact of a long term government shutdown. The lack of supply chain visibility and viable statistics typically provided by government agencies is limiting the effectiveness of supply chain forecasts and planning efforts.
With the top story in every newspaper the government shutdown, Americans wait for word from President Trump on when federal workers will be able to return to work and get paid. Until then, Americans wait. Tick tock….tick tock….