Supply Chain Challenges Have No Quick Fix, Industry Reps Say

At a hearing on supply chain challenges, the committee chairman described deregulation and disinvestment as two root causes, panelists cited overregulation and labor shortages, and there was intense disagreement between the parties on whether the surge in demand for imports was the result of foolish policy or wise economic support for households during the pandemic.

Republicans wanted to talk about ending vaccine or COVID-19 testing mandates for workers at medium and large companies as a solution to labor shortages, and Democrats and panelists praised the bipartisan infrastructure bill and efforts to improve long-haul driver retention as solutions.

House Transportation Committee Chairman Peter DeFazio, D-Ore., said, "Hopefully this hearing will move beyond partisan talking points and … begin to identify real long-term solutions."

Several panelists said that the money coming from the infrastructure bill, the bulk of which will be disbursed from 2024 to 2029, will make the supply chain more resilient.

Mario Cordero, director of the Port of Long Beach, said the White House Supply Chain Disruption task force meetings have been very productive, but reminded members of Congress that the backup at the ports is not solely the product of underinvestment in past years, or American labor practices. He said there are 180 ships anchored off the coast of China, waiting to unload.

Chris Spear, CEO of the American Trucking Association, said he's glad that "a majority in Congress decided to put the country ahead of themselves." He said, "Roads and bridges aren’t political theater, they’re our shop floor." The infrastructure bill passed with 19 of 50 Republican votes in the Senate, and 13 of 213 House Republicans. But even though a tiny proportion of House Republicans supported the bill, their votes were crucial to getting it passed, as there were not enough Democratic votes for it to make a majority.

Physical infrastructure is one of the ATA's two front-burner priorities to improve the supply chain, and the other is the workforce pipeline. Spear said the ATA is "particularly enthusiastic" about a pilot program to train under-21 drivers for interstate trucking, efforts to promote recruitment and retention of female truckers, and promoting the industry to minority drivers.

But Republicans on the committee did not soften their rhetoric on the infrastructure bill after hearing industry's happiness with its passage.

Rep. Scott Perry, R-Pa., complained that DeFazio's opening statement was full of incendiary partisan principles and rhetoric, and then, at its end, he demanded "that nobody else engage in incendiary partisan rhetoric."

Perry then said that "socialists on both sides of the aisle" voted to pump "another 1.25 trillion [dollars] into our economy without any consideration" of inflation.

Anne Reinke, Transportation Intermediaries Association CEO, said that the past approach of making supply chains as efficient as possible is coming home to roost with the surge in demand. Ian Jefferies, CEO of The American Association of Railroads, said that only 3.6% of warehouse space is free.

"Efficiencies can also result in a lack of slack in the system," Reinke said. "That is what we face today. There is no single silver bullet to solve all the supply chain challenges. The market can, and will, adjust, but it does take time."

Spear said the chassis shortage is a chokepoint, and truckers want the ability to choose what chassis to use with various companies' containers. He said they've brought a lawsuit on the issue. In response to a question about American production of chassis, Spear said the tariffs on Chinese chassis compounded the problem, since the industry had been importing heavily from China. There are 25% Section 301 tariffs as well as countervailing duties on Chinese producers of up to 448.7% and antidumping duties of 182%.

Jefferies also pointed to the chassis shortage as an issue. He said that the freight railroads still have more intermodal capacity, however, as they reopened mothballed facilities and rerouted traffic away from congested hubs. He said Congress should not mandate competitive switching, which he said would "gum up the works," and "would only add complexity." Competitive switching would give freight companies access to each others' lines.

Many Republicans asked panelists if the proposed vaccine mandate is hurting their business. Cordero said, on the contrary, vaccines and masks helped the port avoid disruptions.

Rep. Jeff Van Drew, R-N.J., argued, "The single greatest threat to economic security is the Biden vaccine mandate.... If the worker refuses to get forcefully vaccinated then the employer will fire them." That is not true; workers who work in person and who choose not to get vaccinated at companies with at least 100 employees would have to submit coronavirus tests weekly.

Van Drew said it would lead to a "total implosion of the American economy."

Spear said the ATA is pro-vaccine, but that when they asked truck drivers if they would get vaccinated, "it came back as 37% of our drivers not only said 'no' but 'hell, no.'" He said that if even 3.7% of drivers left trucking rather than get vaccinated "that would be catastrophic."

The mandate has not taken effect because federal judges granted an injunction as lawsuits proceed.