Dozens of ships anchored outside America’s busiest ports, steadily rising freight rates, and frustrated consumers inheriting both crippling delays and exorbitant price increases: these have been the painful realities of the global supply chain in recent years. In a whole-of-government effort to alleviate the root and immediate causes of the supply chain crisis, the Biden administration has responded with a roadmap to achieve a more efficient and resilient supply chain. On February 24, the U.S. Department of Transportation (DOT) released a report titled “Assessing the Supply Chain of the Transportation Industrial Base: Freight and Logistics,” which provides several recommendations for addressing the current supply chain. Responding to Executive Order 14017: US Supply Chainsthe report identifies and addresses current challenges, while offering potential policy responses to strengthen the country’s supply chain.
The central theme of the DOT’s in-depth report is the need to build resilient supply chains to deal with current and future disruptions. Due to several factors, including the growth of “just-in-time” supply chains, overwhelming demand for import cargoes during the COVID-19 pandemic, industry consolidation, and a generational lack of investment in infrastructure, the DOT is concerned that the current supply chain lacks resilience. The report underscores this concern in stark terms, noting that the pandemic has compounded existing supply chain issues, resulting in temporary port closures, shortages across the supply chain, high levels of congestion and higher prices for consumers. The statement also highlights a number of barriers to supply chain resilience that the recommendations hope to alleviate, including equipment and warehouse capacity, labor conditions and data availability. , among others.
The report acknowledges that the federal government cannot unilaterally address supply chain disruptions, as many components of the freight supply chain are privately owned and operated, but notes that federal, state agencies and local can still play an important role. funding infrastructure investments, appropriately regulating the industry, improving supply chain data flows, and supporting cross-industry or multi-jurisdictional efforts to improve supply chain resilience.
The report makes 62 specific recommendations for action by DOT and related agencies to address these challenges and attempt to strengthen the nation’s supply chain. The recommendations cover the full range of transport supply chain stakeholders, addressing both very broad and relatively narrow policies. The conclusions are further separated according to the level of complexity of achieving its objective weighed against the cost of implementation and other corresponding factors. Among the main recommendations of the report are:
- Invest in freight infrastructure, such as ports, bridges and railways, to improve capacity and connectivity;
- Develop inland ports and warehouses, as well as invest in the inland waterway system;
- Coordinate with inter-agency partners to provide temporary solutions to reduce port congestion, such as “pop-up” intermodal stations for containers;
- Provide technical assistance to support the planning and coordination of freight investments and operations and support workers employed in this sector, including through new apprenticeship programs and emphasizing the use of old military combatants to fill civilian logistics positions;
- Develop and implement strategies to improve the trucking sector, including ensuring that there is availability of truck parking consistent with land use and safety considerations;
- Support national manufacturing, alli-shoring and nearshoring efforts;
- Improve supply chain performance data and research, including freight and supply chain data tracking, and encourage the development of state-level freight planning; and
- Urge certain regulatory efforts, such as harmonizing the roles of the Surface Transportation Board (STB), Federal Maritime Commission, and DOT and support certain transportation-related legislation/regulations, such as urging Congress to pass maritime regulatory reform , or encourage the STB to require railway owners to provide rights of way for passenger rail transport.
This latest version of DOT is just one initiative as part of the administration’s ongoing efforts to address supply chain disruptions and infrastructure investments. In addition to the report, the administration recently announced numerous reforms, reports, and programs, including:
Port Infrastructure Development Program (PIDP): The DOT Maritime Administration recently announced a Notice of Funding Opportunity for the PIDP, which is making available nearly US$450 million in funding. The program focuses on port-related projects that improve the safety, efficiency or reliability of the movement of goods to, from, around or within a port. Action on this program further demonstrates the maritime administration’s focus on addressing supply chain issues.
Trucking Action Plan: In December 2021, the DOT announced the Trucking Action Plan, which focuses on hiring more truckers and improving the quality of jobs to address low retention rates. The plan includes partnering with the Department of Labor on apprenticeship programs, a pilot program for truck drivers aged 18-21, driver compensation studies, a driver leasing task force, etc
Additional reports: The DOT report was one of seven reports various agencies submitted in response to the same executive order. More relevant to transportation, the Department of Agriculture (USDA) also addressed transportation blockages in its supply chain report, titled “USDA Agri-Food Supply Chain Assessment: Program and Policy Options for Strengthening Resilience.” .
The DOT Supply Chain Report is a broad action plan that, if implemented according to the 62 recommendations, would impact the entire transportation supply chain. Secretary Pete Buttigieg reinforced the criticality of the recommendations, noting that “decades of underinvestment in our infrastructure, unprecedented consumer demand amid our strong economic recovery, and the continued strain of the pandemic have all exerted immense pressure on our supply chains” and “this report sets out crucial steps we can take – both now and in the years to come – to help strengthen our supply chains, create well-paying jobs and ensure that Americans can affordably and efficiently access the goods they depend on.
However, some of the recommendations face direct opposition from industry stakeholders. The freight rail industry, for example, has noted that recommendations encouraging the STB to impose new economic regulations on the industry, and requiring it to provide passenger rail rights of way, will in fact undermine the objectives of the report by disrupting the fluidity of supply chains. As the Biden administration considers new measures, industry engagement on the real-world implications of the recommendations will be crucial.
The simultaneous crises of port congestion, supply chain disruption and rising consumer product prices have placed considerable pressure on individuals and businesses at all touchpoints of the global economy. As the federal government seeks answers to the challenges of productivity and resilience, these recommendations will guide the future actions of the DOT and the Biden administration. The K&L Gates transportation team is closely monitoring the implementation of the DOT Supply Chain Report and encourages industry stakeholders to consider the impacts of the report on their business and to contact a member. team to discuss any concerns.