Market Matters Blog
President Biden Addresses Supply Chain Disruptions
The current shipping crisis has been an ongoing fiasco for well over a year and it continues to get worse. Shipping containers to load soybeans and other commodities have been elusive, especially for many ag shippers, as containers were returned to China empty. Railroad yards have been backlogged with containers for months. Perhaps the most stunning image of this entire mess is full container ships anchored off the Ports of Los Angeles and Long Beach, waiting to berth and unload their precious cargo. Terminals are packed full of both loaded import containers and empty containers waiting to be loaded onto vessels or with export goods. Until there is enough terminal space for those ships to unload, they will have to wait it out.
In an Oct. 13 speech addressing the global transportation supply chain bottlenecks, President Joe Biden said, "After weeks of negotiation and working with my team and with the major union and retailers and freight movers, the Port of Los Angeles announced today that it's going to begin operating 24 hours a day, seven days a week. This follows the Port of Long Beach's commitment to 24/7 that it announced just weeks ago.
"This is the first key step toward moving our entire freight transportation and logistical supply chain, nationwide, to a 24/7 system," added Biden. "That means an increase in the hours for workers to be moving cargo off ships and onto trucks and railcars to get to their destination."
"Containerized agricultural exporters rely heavily on the Los Angeles and Long Beach port complex to move products overseas. The ports' efforts will help regain terminal space by clearing import containers and allow more fluid operations for all users," noted the weekly USDA Grain Transportation Report.
Biden added, "So, by increasing the number of late-night hours of operation and opening up for less-crowded hours when the goods can move faster, today's announcement has the potential to be a gamechanger."
According to the statement made by Biden, Walmart announced it is committing to as much as a 50% increase in the use of off-peak hours over the next several weeks. United Parcel Service and Federal Express, who move up to 40% of packages in America, committed to significantly increase the amount of goods they are moving at night. Target, Home Depot and Samsung have all committed to ramp up their activities to utilize off-peak hours at the ports.
Mike Steenhoek, executive director of the Soy Transportation Coalition, said, "We applaud any effort by the president and any of our national leaders to help address our supply chain challenges. We are certainly hopeful that the measures announced Oct. 13 and others in the future will help mitigate some of the pressure."
Steenhoek specifically addressed the serious issues facing ag shippers, "Because of the pressure to move increased freight with a given capacity, there has been increasing pressure on bringing in shipping containers full of consumer goods or component parts from China to the United States, unload them, and return them to China where they will be reloaded for repeat journey. Therefore, there is an increased unwillingness for ocean vessel companies -- the owners of the shipping containers -- to allow them to deviate from this route in order to be loaded with agricultural or other products for export from the United States. This lack of availability is causing significant stress for those U.S. agricultural exporters who utilize containers."
This shipping crisis began back in 2020 when the pandemic hit, creating a global supply chain mess, causing labor shortages and outbreaks that shut down warehouses or production facilities. When manufacturing came back online last year, it was confronted with a surge of demand, said Steenhoek. "Manufacturing and the supply chain have been catching up ever since. This has been exacerbated by the normal surge of freight during the back-to-school season in the summer and in advance of the holiday shopping season. As nimble as the supply chain endeavors are, it requires considerable time to respond to such a surge in demand. Ocean vessels are very expensive and take a long time to construct. Ports have a limited number of cranes and storage facilities. Freight railroads are very capital intensive."
Steenhoek added, "Arguably the biggest challenge confronting our supply chain in the United States is a shortage of labor. Every mode of transportation is struggling to fill their labor needs. Trucking, barge, freight rail and others are competing with other industries for labor.
"There has been a persistent shortage of truck drivers for a number of years, but it has become enhanced due to the pandemic. Trucking, which requires considerable time away from home, is not an appealing occupation for many workers.
On top of all the issues facing the trucking industry, the state of California has added another one, Assembly Bill 5 (AB5). AB5 is a law signed by Gavin Newsom, the governor of California, that went into effect Jan. 1, 2020. AB5 affects independent contractors throughout California, radically changing 30 years of worker classification and reclassifying millions as employees. However, the California Trucking Association (CTA) on Jan. 20, 2020, was granted a preliminary injunction by the U.S. Southern District Court, which blocks the State of California from enforcing AB5 against motor carriers. The fight isn't over yet and here is a link to updates concerning AB5: https://www.caltrux.org/…
I asked a representative from Boshart Trucking Inc., Tangent, Oregon, if regulations like AB5 affected them. Since the company is based in the Pacific Northwest, I was told the California law doesn't directly affect them and they don't have any bans against owner-operators/independent contractors.
The company, in a post on their Facebook page related to the current transportation supply chain bottlenecks, said, "BOSSCO Trading and Boshart Trucking have been in the drayage/export shipping business for over 15 years and these challenges are some of the greatest we've faced to date. We heard from someone at Tyson Foods who has been in logistics for 45 years and this is the worst he's seen.
"Yes, there is a shortage of qualified truck drivers. The population of drivers is an aging population, with few new members joining the workforce. Even if they do, container drayage trucking is not an easy job even when there isn't a shipping crisis. Having more truck drivers would be a great help, but it is not the only solution."
Boshart Trucking added, "Regulation surrounding topics like clean trucks and independent contractors just add more hoops for truckers to jump through and added costs get passed on to the customer. If marine terminals are going to add extra hours, truckers are going to need those to be consistent in order to plan out their weeks without going over their Federal Motor Carrier Safety Administration (FMCSA) hours of service, and they need the warehouses/distribution centers to have enough staff and longer hours to accommodate additional loads as well."
Owner-Operator Independent Drivers Association President and CEO Todd Spencer issued a response after the Oct. 13 White House meeting on the supply chain crisis, "Truckers have been working tirelessly to keep the country safe and productive throughout the COVID-19 pandemic. They have already been operating around the clock but are often restricted by factors beyond their control, such as excessive detention time and the lack of readily available, safe parking for their trucks.
"These problems must finally be addressed if the administration hopes to implement any significant supply chain solutions. Most of what we are seeing is not a surprise to our members who have been plagued with dysfunction in the supply chain for decades and it's not realistic to expect the supply chain will suddenly operate efficiently on a 24/7 schedule when drivers aren't being fully paid for their time."
In recent months, global supply shortages have forced some truckers off the road, noted Spencer. "Drivers are experiencing the domino effects of supply and staffing shortages that are preventing them from complying with federal regulations. Examples include drug and alcohol testing delays and difficulties finding replacement electronic logging devices, DEF filters and CPAP machines. We encourage the U.S. Department of Transportation and other agencies to begin making some emergency allowances to keep safe, qualified drivers in business."
Spencer said, "But let's be clear, the current supply chain crisis is not due to a shortage of truck drivers! Because the real bottlenecks in the supply chain occur at pick-up and delivery points, adding more trucks and drivers will simply make the lines longer, not faster. Every region of our country and segment of our economy relies upon long-haul truck drivers and it's time that both the government and the trucking industry begins treating them as essential workers. We support the administration's efforts to improve the quality of trucking jobs, but this must start with valuing and compensating all of the drivers' time."
"There's a lot of finger pointing, but this isn't an easy situation you can blame one party or fix with one solution," said Boshart Trucking. "There is no silver bullet. The supply chain is not flexible, and we are seeing that in full force. Many are at fault, and many will need to work together to successfully work through these challenges."
Mary Kennedy can be reached at firstname.lastname@example.org
Follow her on Twitter @MaryCKenn
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