The after-Christmas problem on Biden’s mind

Long-term fixes will require major changes to how supply chains are operated and regulated, labor and industry officials say. Now that attention is shifting away from an imminent holiday crisis, they are leaning on Biden to address long-standing issues related to workers’ rights, market competition and insufficient logistics technology.
“We will not have solved this problem when there are no boats sitting idle off the coast of our country and when we’re not overloaded with containers in yards and in warehouses,” said Greg Regan, president of the AFL-CIO’s Transportation Trades Department. “The problem is only going to be solved if we deal with the structural issues here, and I have faith that this administration is going to do that.”

Biden on Wednesday will deliver his second high-level remarks this month on the supply chain after a meeting with business leaders from FedEx, Gap and transportation company Yellow. It comes as the administration faces down 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.
The reality facing businesses and consumers alike will be months of inflation, labor shortages and product delays as supply chain issues persist. The line of cargo ships off the coast of California has continued to grow and the pace of arrivals isn’t expected to let up next year, said Gene Seroka, executive director of the Port of Los Angeles.
Operators anticipate supply chain disruptions in February due to the Lunar New Year holiday factory shutdowns in Asia. They also expect increased shipments as companies restock their depleted inventories. Retailers, scarred by this year’s challenges, will likely get an early start during the summer months importing products for next year’s holiday season.
“Nobody from our side is declaring victory or doing any kind of high fives even though we look a lot better than I thought we would even back in June and July,” Seroka said. “There’s still a lot of improvements to be made.”
Seroka is among those pressing the administration to funnel money from the bipartisan infrastructure package into modernizing technology so that port authorities, rail operators and trucking companies have access to real-time data. That information could, for instance, track when ships are loaded and leave one location, and when they arrive and are unloaded at another.
Such a system would require reluctant private companies to share their data, much of which they consider proprietary. But Seroka said the federal government could compel them to exchange information that would help the entire supply chain to better anticipate demand and make quick adjustments when bottlenecks emerge.
Porcari said the airline industry offers a model for companies that share logistics information while still competing for business.
“There’s a widespread recognition that’s important in the goods movement chain,” Porcari said. “The private sector leaders in the goods movement chain wouldn’t do this on their own, so a larger force was needed to get them together at the table and work out all these issues.”
That idea and others have been floated during frequent calls among industry officials, labor advocates and administration officials. Porcari has been the point person for those virtual gatherings, which occur multiple times per week. They have been widely credited with getting disparate segments of the supply chain to coordinate for the first time.
But it’s unclear how long Porcari will remain in a role that was designed to be temporary. He declined to specify when his tenure as port envoy would end, though administration officials have previously described the position as a six-month gig. Nevertheless, some industry officials want to see Biden keep an envoy in place.
“The momentum that has been created by a lead official in the administration that’s focusing on ports is something that, quite honestly, our industry has never had before,” Seroka said. “To be able to continue that path of communication and conversation would be unbelievable.”
Labor unions have been brought into those meetings as well, as businesses grapple with a shortage of workers to drive trucks and staff warehouses. Biden has relaxed some trucking regulations and sought to streamline the certification process to get drivers onto the road more quickly.
But Regan at the AFL-CIO said the changes proposed so far do not address the core problem: Workers are underpaid and endure difficult work conditions. Those factors are fueling the industry’s 90 percent turnover rate, he said, and the industry will continue to hemorrhage workers unless they are addressed.
Regan has urged Congress to pass the Protecting the Right to Organize Act, which would require truck drivers to be classified as employees rather than contractors. That would give drivers collective bargaining rights and ultimately enhance their pay and benefits, he said.
“These are all privately operated systems, so it’s not like the government can just sort of snap their fingers and change how things operate. But they are bringing labor concerns into the forefront,” he said.
So far, the administration’s steps have had mixed results. Porcari prodded ports in Los Angeles and Long Beach, Calif., to move to around-the-clock operations, but that change has had minimal impact in part because other segments of the supply chain haven’t extended their hours.
An effort to clear away shipping containers that have clogged the ports has had more success. In late October, the administration urged port authorities to threaten fees on companies with idle cargo; the amount of so-called “aging cargo” at the California ports has since declined 46 percent.
The administration also launched a 90-day plan last week that aims to cut red tape and get more truck drivers onto the road quickly in early 2022. And it has unveiled plans to invest in port infrastructure, including $230 million in grants being announced this week.
Biden assembled a Cabinet-level task force over the summer to devise short- and long-term policies to alleviate product shortages and supply chain congestion. He also directed the Federal Trade Commission and Federal Maritime Commission to investigate consolidation in the global shipping industry, a move triggered in part by record-high shipping rates for exporters.
“While we are grateful that the president has shined a floodlight on the failures of our logistics system, his efforts haven’t yet moved the needle — either in unsticking the supply chain problem or in steering relief to the companies and their workers who have been most harmed by this crisis,” said Steve Lamar, president of the American Apparel & Footwear Association.
“We believe that unsnarling this mess is going to take time, is going to take constant attention well beyond this holiday season, and is going to require all players working together,” Lamar added.
Phil Levy, the chief economist at Flexport, an operating system for global trade, said it takes 109 days on average for a container to get to North America from Asia, up from about 40 to 50 days before the pandemic.
The administration’s approach to focus heavily on the ports and get empty containers off the dock as fast as possible has been “a constructive way” to address the backlog, he said.
But Republicans have repeatedly portrayed Biden as the mastermind of a failed supply chain that was unable to deal with increased demand during the pandemic.
“I know that President Biden thinks Santa can solve our problems, but our supply chain is such a mess, not even Santa Claus with all of his Christmas magic can fix it,” Sen. Rick Scott (R-Fla.) said during floor remarks earlier this month.
Attacks like Scott’s are likely to persist in 2022, as Republicans see the supply chain and inflation as two economic issues that can win votes in the midterms.
Democratic Rep. Salud Carbajal (Calif.), who leads the House subcommittee overseeing ports and maritime issues, said the messaging on supply chain issues has turned against the president and Democrats despite the government having limited influence over the movement of goods.
“It’s important to remind folks that this is the market reacting to various forces,” Carbajal said. “Some of my colleagues across the aisle are trying to make this a one-party blame issue or a White House blame issue, and that’s really mischaracterizing it.”

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