DOT report examines efforts to alleviate nation’s supply chain woes

Coming on the one-year anniversary of the White House’s Executive Order on Supply Chains, the U.S. Department of Transportation (DOT) recently issued a report that highlights what it called “vulnerabilities in our freight and logistics supply chain and clear-cut actions needed to speed up the movement of goods from ships to shelves.”

The report, “Supply Chain Assessment of the Transportation and Industrial Base: Freight and Logistics,” presents steps and approaches that can be taken by the federal government, Congress, states, and private companies to augment supply chains, both today and in the future.

“Decades of underinvestment in our infrastructure, unprecedented consumer demand amid our strong economic recovery, and continued pressure from the pandemic have all put immense strain on our supply chains,” says Transportation Secretary Pete Buttigieg. “This report lays out critically important steps we can take to help strengthen our supply chains, create good-paying jobs, and ensure that Americans can affordably and efficiently access the goods they rely on.”

In the report, DOT made it clear that the nation’s economic strength and quality of life are dependent on the safe and efficient movement of goods both throughout its borders and beyond. And it added that, in order for supply chains to perform well, they need to be successful in three key areas: transportation, production, and sourcing.

“Americans benefit when we bring manufacturing jobs, production, and sourcing to the U.S. rather than outsourcing them abroad,” the report explained. “Onshoring can drive down prices, add resilience, and let America own the industries of the future.”

The report added that when supply chains are disrupted by events such as public health crises, extreme weather, workforce challenges, or cyberattacks, goods are delayed, costs increase, and Americans’ daily lives are affected. “While these disruptions cannot be avoided altogether, we can build supply chains that nimbly and effectively respond to minimize interruptions and keep goods moving under all conditions.”

To that end, DOT cited various factors that supply chains have faced, both domestically and globally, going back several decades including: growing freight demand; changing consumer preferences; attracting, training, and retaining a qualified workforce; increasingly complex, global supply chains where many products are manufactured abroad; rising frequency of disruption caused by climate change; and adapting to new technology while maintaining security.

What’s more, the report called out the need to build more resilient supply chains to counter the many issues that led to major supply chain challenges such as temporary port closures, worker and equipment shortages, increased levels of congestion and delay as well as fluctuating prices.

And it also makes the case for recommended policy responses that DOT envisions can support what it called “a resilient 21st century freight and logistics supply chain for America,” including:

• investing in freight infrastructure, such as ports, bridges, and railroads, to enhance capacity and connectivity;
• providing technical assistance to support the planning and coordination of freight investments and operations and supporting workers employed in this sector;
• improving data and research into supply chain performance;
• strengthening and streamlining governance to improve efficiency, build the workforce, increase competitiveness, and reduce safety and environmental risks; and
• partnering with stakeholders across the supply chain, including coordination with both the public and private sector.

As for some of the steps underway to leverage these objectives, DOT pointed to a number of initiatives.

One key step was the rollout last June of the White House’s Supply Chain Disruptions Task Force, which focused on providing a whole-of-government response to address near-term supply chain challenges to the economic recovery, led by the Secretaries of Commerce, Transportation, and Agriculture, with a “focus on areas where a mismatch between supply and demand has been evident.”

Actions taken through this effort include moving ports towards 24/7 operations, reducing long-dwelling containers sitting on docks, convening stakeholders to discuss strengthening the trucking workforce, and working to increase freight rail service.

An example of this is the recent announcement that DOT has rolled out $450 million in Port Infrastructure Development Grants, its highest-ever allocation through the Infrastructure Investment and Jobs Act, and also a key part of the White House’s Port Action to be made available for U.S. ports to make infrastructure upgrades, including constructing new berths, restoring new docks and extending rail lines.

The report also showcased specific examples being taken at ports, including the Port of Oakland’s partnership with the U.S. Dairy Association for “pop-up” sites to reduced congestion and help agricultural shippers fill empty containers and export goods. It also noted how the Port of Savannah and DOT collaborated on setting up and operating four “pop-up” Georgia-based container yards to lessen congestion, which have subsequently seen reductions in container dwell times and also fewer ships at anchor outside the port.

On the motor carrier side, DOT referred to its Trucking Action Plan, a two-fold effort focused on recruiting more truck drivers, as well as improving the quality of existing driver jobs to counter the low retention rate, through a series of efforts, including partnering with the Department of Labor on registered apprenticeship programs, driver compensation studies, and a driver leasing task force.

Brooks Bentz, LM contributing editor and supply chain consultant, says that there are various components of the report’s findings and recommendations that have strong value.

“Investing in infrastructure in a major way is certainly important, given the current conditions spanning the nation,” says Bentz. “It’s encouraging that they recognize the importance of digital infrastructure as well as physical. Leading supply chain practitioners have recognized that the most significant improvements in supply chain productivity and efficiency will stem not so much from physical assets, but rather from digital capabilities in more effectively running operations.”

According to Bentz, comprehensive visibility to product and data flows and driving real-or-near-real-time network intelligence on what’s really going on can also be a game-changer. “Predictive analytics will play an increasingly vital role in keeping supply chains more nimble and resilient,” he says. “All of these attributes stem from improving digital capabilities.”

Bentz made it clear that the report’s findings by no stretch serve as an immediate panacea for the nation’s supply chain travails either. He explains that there’s appeal in telling the public that congestion will be resolved by things like operating ports 24x7, but he described it as is flawed logic.

“Think about it,” says Bentz. “The ports were quite fluid prior to the pandemic and were handling higher volumes. This is not a one-dimensional problem, and having the gates open around the clock will not solve it. The California legislation outlawing older trucks in a noble effort to improve air quality has also hammered the small-time drayage operators who rely on older trucks cycled out of larger fleets.”

According to Bentz, the drayage business does not support absorbing $100,000+ new tractors to haul containers to railheads and cross-docks, so that has had an impact as well. “Getting drivers has been a difficult challenge for quite some time,” he says. “It’s been exacerbated by the demographic challenge of an aging driver population.”

The bottom line, according to Bentz, is that there simply aren’t enough trucks and drivers to move the freight off the piers quickly enough. “If you want proof, look at the statistics of volume on and off the piers when the night gates first opened, pre-pandemic,” he says. “Negligible. Hasn’t changed much since.”

As for the Trucking Action Plan, Bentz says that it sounds good, as least on the surface, given that recruiting, training and retaining drivers has always been a challenge. “But this doesn’t really speak to how that will change, although the admission of 18- to 21-year-olds to the work force is a big step in the right direction, with much less political risk than having younger people joining over-the-road population,” he adds.

Eric Starks, chairman and CEO of FTR Transportation Intelligence, notes that the report’s findings come down to its intent in terms of helping supply chain stakeholders make better decisions—or is it to gear legislation as well as the allocation of funds?

“I think it’s really all of that, and I do think that the hope is that it could be a way to help solve the supply chain crisis sooner rather than later,” says Starks. “But everything in the report is just not going to help the current situation in the short-term, and I don’t think there’s much of anything that can be done to change that. It’s just a matter of time for these things to be worked out. Maybe over the second half of this year there may be some things that can help mitigate some of these initiatives that the funding is being put toward.”

Starks calls the DOT report “a really good framework” for the next 10 years to 15 years, in that if a lot of these objectives can be fully implemented, it could lead to some game changers in terms of how efficiently the supply chain system moves.

“What’s really needed is a visibility tool for the entire industry to understand what’s happening,” adds Starks. “The report has a lot of detail on what’s happening at a lower level, but I’m having a hard time seeing tools for decision making to assess things that are happening and then react to that.”

Evan Armstrong, president of supply chain consultancy Armstrong & Associates, observes that while there’s a lot featured in the report, he was glad to see continued focus on improving supply chain infrastructure to support international and domestic logistics.

“Port investment, chassis manufacturing, container standardization, last-mile distribution, and improved supply chain data and analytics are all admirable areas of investment in additional to general road infrastructure and waterways projects to help ensure that the United States is positioned for growth and to have a more resilient supply chain,” says Armstrong.

And Eric Oak, research director for global trade intelligence firm Panjiva, says that the report’s observations on investment in port capacity will definitely help increase throughput, especially in the long term.

“These are likely investments that would have had to be made anyway, given the rising trend in imports over the past decade, but getting additional funding won’t hurt expansion plans,” adds Oak. “Efforts like the pop-up container yards are good as well. If ports can increase storage on a burst basis, it can help alleviate spikes in shipments from overwhelming the rest of the system.”