Biden looks to cut supply chain growls as mid-sessions loom

Long-term solutions will require major changes in the way supply chains are operated and regulated, according to labor and industry officials. Now that attention is shifting from a looming holiday crisis, they are relying on Biden to solve long-standing issues around labor rights, market competition and insufficient logistics technology.

“We will not have solved this problem when there are no inactive ships off the coast of our country and when we are not overloaded with containers in the yards and in the warehouses,” said Greg Regan, chairman of the AFL-CIO transport department. . “The problem will only be solved if we deal with the structural problems here, and I have no doubts that this administration will do it.”

Biden gave his second high-profile supply chain speech this month on Wednesday ahead of a meeting with business leaders from FedEx, Gap and shipping company Yellow. It comes as the administration faces off against Republican critics who are eager to blame Democrats for high consumer prices and make inflation a campaign issue in 2022 as they seek a majority in Congress.

“Earlier this fall, we heard many warnings about supply chain issues leading to a crisis over the holidays, so we took action,” Biden said. “We have brought together business and union leaders to solve the problems and the much predicted crisis has not happened. Packages are on the move. Gifts are being delivered. The shelves are not empty.”

But Biden’s argument that a supply chain crisis didn’t materialize for the holidays doesn’t mean the delays and staffing issues weren’t there – and the issues won’t go away after the news breaks. year.

The reality that businesses and consumers will face will be months of inflation, labor shortages and product delays as supply chain issues persist. The cargo line off the coast of California has continued to grow and the pace of arrivals is not expected to slow down next year, said Gene Seroka, executive director of the Port of Los Angeles.

Operators anticipate supply chain disruptions in February due to Lunar New Year holiday plant closures in Asia. They also expect shipments to increase as companies replenish their depleted inventory. Retailers, marked by this year’s challenges, will likely start importing products for next year’s holiday season early in the summer months.

“No one on our side is proclaiming the win or doing any sort of high five, even though we look a lot better than I thought even in June and July,” Seroka said. “There are still a lot of improvements to be made.

Seroka is among those pressing the administration to channel money from the bipartisan infrastructure package to modernizing technology so that port authorities, rail operators and trucking companies have access to the data. in real time. This information could, for example, indicate when ships are loaded and leave one location, and when they arrive and are unloaded at another.

Such a system would force reluctant private companies to share their data, most of which they consider to be proprietary. But Seroka said the federal government could force them to exchange information that would help the entire supply chain better anticipate demand and make quick adjustments when bottlenecks emerge.

Porcari said the airline industry provides a model for companies to share logistics information while continuing to compete for business.

“There is a broad recognition that is important in the chain of movement of goods,” Porcari said. “Private sector leaders in the freight chain would not do it alone, so a bigger force was needed to bring them around the table and solve all of these issues. “

This idea and others were launched in frequent appeals between industry officials, labor rights advocates and administration officials. Porcari was the contact person for these virtual gatherings, which take place several times a week. They have been widely credited with coordinating disparate segments of the supply chain for the first time.

But it’s unclear how long Porcari will stay in a role that was designed to be temporary. He declined to say when his tenure as port envoy would end, although administration officials previously described the post as a six-month contract. Still, some industry officials want Biden to keep an envoy in place.

“The momentum created by an administration official who focuses on ports is something that, quite frankly, our industry has never had before,” said Seroka. “Being able to continue on this line of communication and conversation would be amazing. “

Unions have also been associated with these meetings as companies grapple with a shortage of workers to drive trucks and staff warehouses. Biden relaxed some trucking regulations and sought to streamline the certification process to get drivers on the road faster.

But AFL-CIO’s Regan said the changes proposed so far do not solve the central problem: Workers are underpaid and face harsh working conditions. These factors are fueling the industry’s 90 percent turnover rate, he said, and the industry will continue to bleed workers unless they are addressed.

Regan urged Congress to pass the Right to Organize Protection Act (S. 420 (117), which would require truck drivers to be classified as employees rather than contractors. This would give drivers collective bargaining rights and, ultimately, would improve their pay and benefits, he said.

“These are all private systems, so it’s not like the government can just snap its fingers and change the way things work. But they put labor issues at the forefront, ”he said.

So far, the measures taken by the administration have had mixed results. Porcari pushed the ports of Los Angeles and Long Beach, Calif., To move to 24-hour operations, but the change had minimal impact in part because other segments of the supply chain weren’t have not extended their opening hours.

An effort to clear sea containers that have clogged ports has been more successful. At the end of October, the administration urged the port authorities to threaten companies whose cargo is unused; the amount of so-called “aging cargo” in California ports has since declined by 46%.

The administration also launched a 90-day plan last week that aims to cut red tape and get more truck drivers on the road in early 2022. And it unveiled plans to invest in port infrastructure. , including $ 230 million in grants announced this week. .

Biden convened a Cabinet-level task force over the summer to design short- and long-term policies to alleviate product shortages and supply chain congestion. He also asked the Federal Trade Commission and Federal Maritime Commission to investigate consolidation in the global shipping industry, a move triggered in part by record shipping rates for exporters.

“While we are grateful that the president has shone the spotlight on the failures of our logistics system, his efforts have yet to move the needle – whether to solve the supply chain problem or to alleviate the problems. companies and their workers who have been most affected by this crisis, ”said Steve Lamar, president of the American Apparel & Footwear Association.

“We believe that resolving this mess will take time, receive constant attention well beyond this holiday season, and require all players to work together,” added Lamar.

Phil Levy, chief economist at Flexport, an operating system for global commerce, said it takes an average of 109 days for a container to arrive in North America from Asia, compared to around 40 to 50 days before the pandemic.

The administration’s approach of focusing heavily on ports and removing empty containers from the quay as quickly as possible has been “a constructive way” to address the backlog, he said.

But Republicans have repeatedly described Biden as the mastermind of a failing supply chain that has been unable to meet increased demand during the pandemic.

“I know President Biden thinks Santa Claus can solve our problems, but our supply chain is such a mess, even Santa with all his Christmas magic can’t fix it,” Senator Rick Scott said. (R-Fla.) During the speech. remarks earlier this month.

Attacks like Scott’s are expected to persist into 2022, as Republicans see the supply chain and inflation as two economic issues that are likely to win votes mid-term.

Democratic Representative Salud Carbajal (Calif.), Who heads the House subcommittee overseeing port and maritime issues, said messages about supply chain issues have backfired on the president and Democrats despite the fact that the government has limited influence over the movement of goods.

“It’s important to remind people that it’s the market that reacts to various forces,” Carbajal said. “Some of my colleagues across the way are trying to make it a one-party blame issue or a White House blame issue, and that’s a really bad description.”