The Biden administration is touting a 90-day industry push to help relieve freight gridlock at Southern California ports. Secretary of Transportation Pete Buttigieg acknowledged on Sunday, however, that consumers waiting for Christmas orders won’t see immediate results because improving the efficiency of maritime supply chains is a long-term process involving multiple stakeholders.
Federal officials began looking at expanded port hours early this year as part of a supply chain policy review, but it took until recent weeks for the ports of Los Angeles and Long Beach to announce 24/7 operations and large importers like Walmart (NYSE: WMT) to commit to opening some warehouses at night for container deliveries.
“There are both short-term and long-term steps that we can take to do something about it,” and part of the challenge is an extraordinary volume of retail sales that have taxed the system, Buttigieg said on CNN’s “State of the Union.” “Our role is to be an honest broker, bring together all of the different players there, secure commitments and get solutions that are going to make it easier.”
Many logistics industry observers have questioned the significance of the White House’s recent announcements, noting that only one terminal in Long Beach is testing around-the-clock operations, that Los Angeles hasn’t taken any concrete steps yet and that big shippers only committed to take a few hundred more containers a week at night. So far, virtually no truckers have shown up to retrieve containers during the first month of experimentation at Long Beach’s Total Terminals International because of restrictive conditions.
“The administration’s move last week to secure longer hours at the Ports of LA and Long Beach is largely symbolic. It fails to address the continuing problems moving containers out of the ports, or what is going on at other ports around the country,” said Steve Lamar, president of the American Apparel & Footwear Association, in a statement on Monday. “Much more needs to be done to end this backup, and more must be done to address price gouging and unreasonable practices by carriers. Further, we continue to call for the Federal Maritime Commission to properly use the authorities it already has to help mitigate this crisis.”
Lamar’s comments refer to the tenfold increase in container shipping rates over the past year, including premiums to guarantee reservations, carriers ignoring shipping contracts to prioritize higher-yield shipments on the spot market, and penalty fees issued to shippers for exceeding free-time storage at marine terminals or late return of containers.
Importers and exporters complain that they shouldn’t be penalized for conditions outside their control that prevent the timely pickup and return of containers. And they are pushing the FMC to make sure foreign carriers aren’t engaging in anti-competitive or unfair trade practices.
Extended gate hours is “just one piece of a very complex puzzle where you’ve got the terminals, the rail piece, you’ve got the warehouses, the drivers. And we’re working on all of those angles,” Buttigieg said on NBC’s “Meet the Press.” “But let’s remember, these are private-sector systems. This is a capitalist country. Nobody wants the federal government to own or operate the stores, the warehouses, the trucks, or the ships, or the ports. Our role is to try to make sure we’re supporting those businesses and those workers who do.”
The transportation secretary deflected questions about whether the administration is considering lowering tariffs on Chinese imports to lessen the pain for businesses dealing with rising shipping costs, using the National Guard or the U.S. Navy to help unload vessels and clear container yards, or even issuing temporary visas to bring workers in from overseas, as some have suggested.
The retail and apparel industries have urged a rollback of the Trump tariffs on China, saying the reduction in import taxes would help businesses offset much higher freight costs due to port congestion.
Buttigieg said the Biden administration is focused on operational issues that can make a sustainable difference in how ports function, such as increasing the availability of truckers.
The Federal Motor Carrier Safety Administration, he said, is working with state motor vehicle divisions to cut red tape and speed up the issuance of CDLs to get more qualified truckers on the road, including those who serve ports.
“Let’s also acknowledge we have some more profound issues in our economy. … If you look at the large employers of truck drivers, the annual rate of turnover is 90%. That tells us that there’s something deeper going on than any short-term fix is going to address. Truck drivers want to be paid. They want to be respected.
“Secretary of Labor Marty Walsh and I have been speaking out about this. And if we’re not dealing with these deeper issues in our economy, just like we’ve got to deal with deep issues in our infrastructure, then, you know, these shorter-term measures are really not going to be enough. That’s why we have things like the infrastructure bill, like the Build Back Better plan that are really going to set up America for success in the long term,” the transportation secretary said on “Meet the Press.”
COVID outbreaks and manufacturing slowdowns in Asia, limited vessel space, as well as domestic imbalances of transportation capacity and demand, are also major contributors to the backlogs at ports.
Ocean transit times from China to the U.S. West Coast have more than doubled from about 16 days prior to the pandemic to 36 days, according to Shifl, a freight forwarder that uses technology to help vendors and customers better share information.
“We’ve got to make sure that the supply chains in the short term and the long run are positioned to catch up. Now, a lot of this should be resolved by markets, but we’re not waiting for the markets to take care of it,” Buttigieg said.
The American Apparel & Footwear Association, in comments submitted Monday to the Department of Transportation, said more needs to be done to address the supply chain crisis. Among the steps it advocates is passage of the Ocean Shipping Reform Act of 2021.
“The bottom line: the actions taken by the Administration so far — while all steps in the right direction — have failed to move the needle to address the quickly worsening crisis. Much more needs to be done, including aggressive enforcement actions,” it said.
“This Week” on ABC News also addressed the issue. An economist discussed port bottlenecks and rising inflation due to transportation.