The White House released a video showing President Joe Biden on the phone with shops who were complaining about the high cost of ocean shipping before his planned speech at the Port of Los Angeles on Friday.
“One of the major causes for price increases is the cost of shipping products over the Pacific, particularly,” Biden said on the call. “There are just nine large ocean liners that travel from Asia to the United States.” These businesses have hiked their rates by up to 1,000%.”
The video concludes with Biden urging Congress to enact the Ocean Shipping Reform Act, which the United States House of Representatives is slated to vote on as soon as next week. “I believe it will pass.” “And I’m looking forward to signing it,” says Biden.
Biden is anticipated to describe his administration’s efforts to alleviate supply chain disruption and high shipper prices, which have dominated most of his term.
“President Biden must ensure that international ocean carriers provide dependable and affordable ocean transportation for our agriculture exports to the world as a condition of bringing imports from China and other countries into the US through US ports (and announcing billions of dollars in profit each quarter),” Peter Friedmann, executive director of the Agriculture Transportation Coalition, told FreightWaves ahead of Biden’s speech.
So far, Biden has spent a significant amount of time in office dealing with supply chain disruption. The following is a summary of some of the significant initiatives made by the administration to mitigate supply chain interruptions at ports.
Continual operations
When the ports of Los Angeles and Long Beach extended their gate hours in September, it gave companies like Walmart, FedEx, and UPS a foothold to follow suit in October with plans to expand their container operations at the ports as well — part of the administration’s effort to unclog the massive container bottleneck at the country’s largest container terminal complex.
Ocean carriers such as CMA CGM assisted the effort by opening their terminal gates to 24/7 operations and offering a $100-per-container reward to intermodal truckers and importers who moved containers off their dock within eight days. For years, railroads have run 24-hour port operations.
However, because of the numerous other parties involved in port operations, such as storage and drayage, transportation, and port labor, transitioning to 24/7 operations was a difficult task.
“I think in concept, [running 24/7] sounds like a really good option when you have big quantities,” Tim Lynch, senior director at the law firm Morgan & Lewis, remarked at a recent National Industrial Transportation League meeting.
“The problem is that, while there were longshoremen ready to load or unload, the trucks weren’t coming in because the drivers were out of hours or couldn’t locate chassis.” So having the ports open 24 hours a day, seven days a week without the rest of the supply chain supporting it is a hollow achievement.”
Container yards that pop up
By transferring $8 million in federal monies in November, the Biden administration helped fund the Georgia Ports Authority’s emergency overflow “pop-up” container storage facilities at places miles from actual port regions.
The lots were successful in reducing congestion at the Port of Savannah, and the port task force, in collaboration with the United States Department of Agriculture and the Port of Oakland, replicated the concept earlier this year with funding for a new 25-acre container staging area near the port reserved specifically for agricultural exports.
In addition to covering 60% of the cost of establishing the latest “pop-up” container yard, USDA is providing a $125-per-container subsidy to shippers who utilize the yard to offset the logistical costs of transporting the containers there. A similar collaboration with the USDA was formed in March at the Northwest Seaport Alliance, which encompasses the ports of Seattle and Tacoma, with shippers receiving subsidies ranging from $200 to $400 per container.
According to John Butler, president and CEO of the World Shipping Council, “based on what I’m hearing, these have been useful.” “There’s always a scalability issue since you can only handle so much freight that way.” But the administration has used it effectively, and I believe it is making a difference.”
Infrastructure investment
In January, Biden’s transportation chief, Pete Buttigieg, visited the ports of Los Angeles and Long Beach, promoting record-breaking cargo numbers while committing to exploring the possibility of anticompetitive behavior in the ocean container markets.
He also advocated for historic improvements in maritime infrastructure, using funds approved in the president’s $1.2 trillion infrastructure plan enacted in November.
“As long as the pandemic exists, as long as we are making up for decades of historical disinvestment,” Buttigieg said, “we will see consequences on shipping times and shipping costs.”
Buttigieg referenced a $52.3 million grant to fund an on-dock rail project at the Port of Long Beach to offset such effects. The funding was part of a $241 million package that included 25 port developments in 19 states.
In May, the Department of Transportation reported the highest yearly funding from its Port Infrastructure Development Program in its history, $684 million.
“[Those investments] take time to deploy; they’re long-term tools,” Butler explained. “That was a bipartisan effort, and I believe it is one of the best ways the federal government can handle these supply chain challenges.” We know we’re falling behind on infrastructure maintenance and expansion, and you can’t have efficient end-to-end supply chains unless we catch up.”
Freight Logistics Optimization Is Effective
The White House announced in March a Department of Transportation data-sharing effort called Freight Logistics Optimization Works (FLOW), a pilot freight data exchange aimed at improving the digital infrastructure connecting the supply chain, to build on previous efforts and improve the flow of goods through physical infrastructure.
The pilot featured 18 initial partners, including ports, shippers, trucking, warehousing, and logistics companies, and administration officials believed it would result in a proof-of-concept freight data exchange by the end of the summer.
According to a White House fact release, “these critical players will collaborate with the Administration to establish a proof-of-concept information exchange to reduce supply chain congestion, accelerate the movement of goods, and ultimately cut costs for American consumers.”
However, no progress has been revealed publicly since the concept’s inception, prompting mistrust and anxiety.
Sen. Roger Wicker, R-Miss., wrote Buttigieg a letter a month after FLOW was launched, requesting further details on how FLOW would work and the amount to which the government would be involved in overseeing it.
“Any attempt to improve freight transportation system efficiencies must be useful for the huge number of stakeholders that work in and rely on the freight network,” Wicker wrote. “For the FLOW effort to be effective, it must take a balanced, open-minded approach that incorporates comments from a diverse range of transportation stakeholders and shippers.”
Task Force on Truck Leasing
The administration’s multidimensional Trucking Action Plan, revealed in December, includes a Driving Good Jobs effort sponsored jointly by the Department of Transportation and the Department of Labor. The initiative’s purpose is to improve the bar not only on driver recruiting but also on retention, including research into truck driver remuneration and unpaid detention time.
It also authorizes the Federal Motor Carrier Safety Administration to establish a truck leasing task group, for which applications were accepted in April. The statute compels the commission to assess the agreements available to drayage drivers at ports, among other things.
Port drayage has been a source of many complaints concerning unscrupulous leasing tactics in the trucking industry.
In introducing the program, Buttigieg remarked, “The Truck Leasing Task Force highlights one of the essential actions the government is taking to reform the trucking business.” “Truck drivers in America need and deserve fair leasing arrangements, and this work will assist ensure that leasing is done correctly.”
