Supply Chain Logjam Is Subject of Another House Hearing

Supply Chain Logjam Is Subject of Another House Hearing

November 19, 2021  | Katie Donahue

On November 17th, the House Transportation and Infrastructure Committee held a hearing entitled “Industry and Labor Perspectives: A Further Look at North American Supply Chain Challenges.” This examined the current supply chain problems, mostly by looking at the relationship between the maritime shipping, freight railroads, and the trucking industry, and how this can be optimized to ease the supply chain logjam currently happening in the U.S.

This past June, T&I’s Coast Guard and Maritime Subcommittee held a hearing on container shortages and delays, focusing on how it affected American exporters (covered in ETW here). This hearing builds off proposed solutions from that hearing but focused more on the intermodal nature of freight movement, looking for solutions to optimize the clogged system.

Witnesses included:

  • Mario Cordero, Executive Director, Port of Long Beach, On behalf of the American Association of Port Authorities
  • Chris Spear, President and CEO, American Trucking Associations
  • Ian Jefferies, President and CEO, Association of American Railroads
  • Anne Reinke, President and CEO, Transportation Intermediaries Association
  • David Correll, Lecturer, Massachusetts Institute of Technology Center for Transportation and Logistics
  • Greg Regan, President, Transportation Trades Department, AFL-CIO

Below is a list of notable statistics cited at the hearing:

  • The Port of Long Beach and the Port of Los Angeles move over 40 percent of the nation’s goods (Cordero)
    • In 2021, the Ports of LA & LB moved 17 percent more containers than same period in 2019 (Cordero)
  • Prior to the pandemic, the trucking industry was short 61,000 drivers. Now, they are short 80,000 (Spear)
    • Yet for the most demanding sector of long-haul trucking, pay has increased 24 percent since the beginning of pandemic (Spear)
    • When surveyed, 37 percent of drivers said they would refuse to get a vaccine (Spear)
  • While long-haul truck drivers are allowed to drive for 11 hours, one average they only spend 6.5 hours driving due to long lines and backups (Correll)
  • The U.S. has 3.5 million truck drivers and 313,000 truck parking spaces between private truck stops and public rest areas. That’s one space for every 11 drivers (Spear)
  • Nationwide, there is a 3.6 percent warehouse vacancy rate – there is almost no warehouse space left (Jeffries)

The supply chain has been a hot topic in the news for the past year, where articles cite supply chain problems for everything from Peloton shortages in 2020/2021, to the inflated price of used vehicles, to some even warning that if you haven’t started already, you’re behind on holiday shopping. To paraphrase the familiar story, once the pandemic hit, consumers shifted their spending from services to goods. This rise in e-commerce led to a spike in Asian manufactured goods being imported to the U.S., creating several ripple effects within the already at-capacity U.S. supply chain, which had to use the same stressed infrastructure to deliver a 15 percent increase in consumption, moving those products from the West Coast ports to a consumer’s front door.

Much of the conversation in this hearing revolved around trucking. Truckers often wait for several hours to load cargo, sometimes maxing out their allowable hours before they reach the loading area. In previous years, told Rep. DeFazio (D-OR), warehouses were penalized when drivers had to wait. He recommended reinstating fines to loading facilities to encourage efficiency and lessen wait times for truckers. Another solution many offered is to create better technology systems that can share data between modes and more effectively schedule loading times.

Similarly, trucking faces a chassis shortage, and Spear admitted the difficulties in fixing this as the U.S. supply chain relies heavily on Chinese-produced chassis. He recommended building more chassis domestically. Reps. DeFazio and Babin (R-TX) both mentioned the truck parking crisis. With one parking space for every 11 truck drivers, this forces many to park dangerously on the side of the road. While provisions for truck parking were included in the House’s infrastructure bill, the INVEST Act, they were not included in the final IIJA.

On the labor problems with trucking, Spear mentioned the conditions of some loading facilities: sometimes drivers are banned from parking on property or not allowed to use the restroom. This deplorable treatment of drivers, told Spear, only hurts the perception of the already strained occupation of long-haul trucking. Correll recommended raising the standard of warehouses and loading facilities so they are modern and useable. In the same way we can look up a restaurant’s food safety grade, Correll recommended facilities at warehouses and terminals should have a publicly available rating based on dwell time and facilities/amenities available to truck drivers. If truck drivers are treated with dignity and given the proper facilities, argued both Spear and Regan, it would greatly help with workforce retention.

In addition, Correll and Spear also spoke about the challenging conditions of being a truck driver: you work long hours and sometimes are away from home for three to four weeks at a time.. Many have families do not want this lifestyle, and prefer to do shorter routes, with Correll citing his research that truck drivers who stay with their employers tend to drive Tuesday, Wednesday, and Thursday with less hours on the weekends. Spear also recognized that this is difficult work, but long-haul truck drivers can make $70,000-$100,000 annually without a college degree. Nevertheless, the most demanding sector of long-haul truck driving has a 90 percent annual turnover rate. In order to attract workers, Regan clarified, companies need to treat their employees well and offer robust healthcare and benefits so they stay in their jobs.

Finally, while during the peak of the pandemic, DMVs and training centers were closed, most are open now and are back to training workers to get commercial driver’s licenses (CDLs). However, Spear offered two challenged in getting CDLs. Many small trucking companies do not have the upfront money to pay for employee’s CDL schools, so Spear recommended they qualify for grants, such as higher education grants. In addition, there was some discussion on the Drive Safe Act, which would allow commercial truck drivers under age 21 to cross state lines. Drivers under 21 can legally drive trucks within 49 states but cannot cross state lines. Spear argued that this is a logical step forward. Reagan had some safety concerns, but both agreed that as a pilot program is included in the IIJA, they will analyze the effects of the program and see if this should be passed into law.

Spear also warned about vaccine mandates: when ATA surveyed truck drivers, 37 percent said they absolutely would not get the vaccine. ATA wants to encourage drivers to get the vaccine, but ultimately, Spear said, the industry cannot afford to loose 250,000 drivers in a supply chain that is already under pressure.

There was limited discussion about railroads, aside from the more general conversations surrounding intermodality as well as precision-scheduled railroading (PSR). Some, such as Regan as well as Reps. DeFazio, Payne (D-NJ), and Garcia (D-IL), dislike the PSR system because it replaced personnel with technology, while freight railroads continued to increase their profits.

Regan was the labor advocate for this hearing. Rep. Guest (R-MS) voiced his dissatisfaction that the PRO Act would change the way independent truckers are classified and would remove the choice to be an independent contractor. However, Rep. Fitzpatrick (R-PA) voiced his support for union labor as protecting the rights of workers and helping get better workplaces safety and benefits.

There was some discussion about ports, mostly about the intermodal connections to rail and trucks, as well as fines to encourage expediting and expanding hours to help truck drivers. Reps. Garamendi (D-CA) and Johnson (R-SD) also spoke about their bipartisan legislation of the Ocean Shipping Reform Act, which would expand the powers of the Federal Maritime Commission (FMC). While the agency can do research and write reports, it does not have the power to enforce things like the abuse of detention and demurrage. This legislation would empower the FMC to set rules. The Transportation Intermediaries Association supports the legislation, with Reinke noting that shipping laws need to be modernized to fit our current state of affairs.

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