By John Gallagher of FreightWaves
Ahead of President Joe Biden’s planned speech at the Port of Los Angeles on Friday, the White House released a video of the president on a phone call with retailers who are complaining about the high cost of ocean shipping.
“One of the big reasons why prices are going up is the cost of shipping things across the Pacific, in particular,” Biden says during the call. “There’s only nine major ocean line shipping companies who ship from Asia to the United States. These companies have raised their prices by as much as 1,000%.”
The video ends with Biden calling on Congress to pass the Ocean Shipping Reform Act, which the U.S. House of Representatives is expected to vote on as early as next week. “I expect it to pass. And I’m looking forward to signing it,” Biden states.
In his upcoming speech, Biden is expected to recount efforts by his administration to ease the supply chain disruption and high shipper costs that have dominated much of his tenure.
“President Biden must assure that the international ocean carriers, as a condition of bringing imports from China and other countries into the US through US ports (and announcing billions of dollars of profit each quarter), provide dependable and affordable ocean transportation for our agriculture exports to the world,” Peter Friedmann, executive director of the Agriculture Transportation Coalition, told FreightWaves in anticipation of Biden’s speech.
Biden has so far devoted a significant amount of time in office to dealing with supply chain disruption. The following is a recap of some of the major actions the administration has taken to alleviate supply chain disruptions at the ports.
When the ports of Los Angeles and Long Beach expanded their gate hours in September, it provided a toehold for companies like Walmart, FedEx and UPS 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.
The effort was aided by ocean carriers such as CMA CGM, which opened its terminal gates to 24/7 operations and offered a $100-per-container incentive to intermodal truckers and importers to move containers off its dock within eight days. And railroads have been operating 24/7 port operations for years.
But because of the number of other players connected to port operations — including warehousing and drayage trucking and port labor — moving to 24/7 operations was a steep hill to climb.
“I think in concept when you have huge volumes, [going 24/7] sounds like a very good solution,” said Tim Lynch, senior director at the law firm Morgan & Lewis, speaking at a recent meeting of the National Industrial Transportation League.
“The difficulty there is, while there were circumstances where longshoremen were there ready to load or unload, the trucks weren’t coming in because the drivers were out of hours or they couldn’t find chassis. So just having the ports operating 24/7 without the rest of the supply chain accommodating that, it’s sort of a hollow victory.”
Pop-up container yards
In November, the Biden administration helped fund the Georgia Ports Authority’s emergency overflow “pop-up” container storage lots at sites miles from the actual port areas by redirecting $8 million in federal funds.
The lots proved successful in alleviating congestion at the Port of Savannah, and the port task force, along with the U.S. 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 agriculture exports.
In addition to paying 60% of the cost to start up the latest “pop-up” container yard, USDA is providing shippers that use the yard a $125-per-container subsidy to offset the logistical costs of getting the containers there. A similar partnership with USDA was created in March at the Northwest Seaport Alliance, which includes the ports of Seattle and Tacoma, with subsidies to shippers of $200-$400 per container.
“Based on what I’m hearing, these have been useful,” John Butler, president and CEO of the World Shipping Council, told FreightWaves. “There’s always a question of scale, because you can only handle only so much cargo that way. But it has effectively been deployed by the administration and I think it’s making a difference.”
Biden’s transportation chief, Pete Buttigieg, visited the ports of Los Angeles and Long Beach in January, using the visit to promote record-setting cargo volumes while vowing to address the potential for anticompetitive behavior within the ocean container markets.
He also promoted historic investments in maritime infrastructure, from funding authorized within the $1.2 trillion infrastructure bill signed by the president in November.
“As long as the pandemic persists, as long as we are making up for decades of past disinvestment, we are going to see impacts on shipping times and shipping costs,” Buttigieg stated.
To counter those impacts, Buttigieg cited a $52.3 million grant to support an on-dock rail project at the port of Long Beach. The grant was part of a $241 million package of 25 port projects awarded in 19 states.
In May, DOT announced the most annual funding from its Port Infrastructure Development Program — $684 million — in the department’s history.
“[Those investments] take time to implement; they’re a long-term set of tools,” Butler said. “That was a bipartisan effort, and I think it’s one of the most appropriate ways the federal government can address these supply chain issues. We know we’re behind on maintaining and expanding infrastructure, and you can’t have efficient end-to-end supply chains unless we keep up.”
Freight Logistics Optimization Works
To build on efforts and improve the flow of goods through physical infrastructure, 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.
The pilot — which administration officials hoped would result in a proof-of-concept freight data exchange by the end of the summer — had 18 initial participants, including ports, shippers, trucking, warehousing and logistics companies.
“These key stakeholders will work together with the Administration to develop a proof-of-concept information exchange to ease supply chain congestion, speed up the movement of goods, and ultimately cut costs for American consumers,” a White House fact sheet stated.
Since the concept’s launch, however, little progress has been announced publicly — but there has been skepticism and concern.
A month after FLOW was announced, Sen. Roger Wicker, R-Miss., sent a letter to Buttigieg asking for more information on how FLOW would operate, and the extent to which the government would be involved in overseeing it.
“Any work to enable greater efficiencies in the freight transportation system must be usable for the enormous number of stakeholders who work in, and rely on, the freight network,” Wicker wrote. “To be successful, the FLOW initiative should adopt a balanced, open-minded approach that incorporates feedback from a broad array of transportation stakeholders and shippers.”
Trucking leasing task force
The administration’s multifaceted Trucking Action Plan unveiled in December to bolster the trucking sector includes a Driving Good Jobs initiative launched jointly by DOT and the Department of Labor. The goal of the initiative is to raise the bar not only on driver recruitment but on retention — including studying the issue of truck driver pay and unpaid detention time.
It also directs the Federal Motor Carrier Safety Administration to create a truck leasing task force, applicants for which FMCSA began accepting in April. Tasks that the law requires the panel to accomplish include reviewing the agreements available to drayage drivers at ports.
Port drayage has been a sector of trucking generating a high number of complaints about predatory leasing practices.
“The Truck Leasing Task Force represents one of the important actions the administration is taking to improve the trucking industry,” Buttigieg said in announcing the program. “America’s truck drivers need and deserve fair leasing agreements, and this work will help ensure that leasing is aboveboard.”