U.S. Department of Transportation report examines efforts to alleviate nation’s supply chain woes

The United States Department of Transportation (DOT) this week issued a report, coming on the one-year anniversary of the White House’s Executive Order on Supply Chains, which 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, entitled “Supply Chain Assessment of the Transportation and Industrial Base: Freight and Logistics,” presents myriad steps and approaches, which can be taken by the federal government, Congress, states, and private companies can take to augment supply chains, both presently 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,” said Transportation Secretary Pete Buttigieg in a statement. “This report lays out critically important steps we can take—both right now, and in the years ahead—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, as well as 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 United States rather than outsourcing them abroad,” the report explained. “Onshoring can drive down prices, add resilience, and let America own the industries of the future. 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, and, of course, over the past two years, due to the pandemic, including: growing freight demand; changing consumer preferences, including demand for rapid delivery; 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 made the case for the need to build more resilient supply chains to counter the many issues and led to major supply chain challenges such as temporary port closures, worker and equipment shortages, increased levels of congestion and delay, and also fluctuating prices.

And it also makes the case for what it called recommended policy responses DOT envisions that 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 June rollout of the White House’s Supply Chain Disruptions Task Force 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 this week’s 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 Plan to be made available for U.S. ports to make infrastructure upgrades, including constructing new berths, restoring new docks, and extending rail lines, among others.

And it showcased specific examples being taken at ports, including the Port of Oakland’s partnership with the United States 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. A third ports-based example is the proposed fines for ocean shippers, at the Port of Long Beach and the Port of Los Angeles, for long-dwelling containers, which has resulted in a cumulative 65% reduction in container dwell at the ports, while the fines have not been implemented.

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 position’s years-long low retention rate, through myriad efforts, including: partnering with the Department of Labor on registered apprenticeship programs, a pilot program for drivers between 18-to-21-years old that leverages registered apprenticeships to ensure safety through rigorous driving standards, driver compensation studies, and a driver leasing task force, among others.

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

But he also made it clear that the report’s findings, by no stretch, serve as an immediate panacea, of sorts, for the nation’s supply chain travails either, as he explained there is 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:  the ports were quite fluid prior to the pandemic and were handling higher volumes,” he said. “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.  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.  Getting drivers has been a difficult challenge for quite some time.  It has been exacerbated by the demographic challenge of an aging driver population, compounded by most being in a high-risk category relative to Covid.  Bottom line:  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.  Negligible. Hasn’t changed much since.”

As for the Trucking Action Plan, Bentz said that it sounds good, as least on the surface, given that recruiting, training and retaining drivers has always been a challenge. 

“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 the OTR (over-the-road) population,” he said.

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

“I think it is really all of that, and I do think that the hope is that it could be a way to kind of help solve the supply chain crisis sooner rather than later,” he said. “But everything in [the report] is just not going to help the current situation in the short-term. And I don’t think there is much of anything that can be done, or that is already being done, to change that. It is just a matter of time for these things to be worked out. Maybe over the second half of the year there are some things that can help mitigate some of these initiatives funding is being put towards, which can potentially alleviate some of these pressure points.”

Starks called the DOT report “a really good framework” for the next 10-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.

Addressing the research and data components of the report, Starks said that is welcomed, as on a long-term structural basis, more supply chain visibility is needed.

“What is really needed is a visibility tool for the entire industry to understand what is happening,” he said. “The report has a lot of detail on what is happening at a lower level, but I am having a hard time seeing tools for decision making to assess things that are happening and then react to that. “Having the detail is hugely helpful, but now there is a lot of disjointed information out there. If you try to find out how many ships are waiting at a particular port, good luck if you are always able to find it at one location. It is just not consistent, and the data is not always publicly available. I would love to see publicly available information being collected at the government level, because it then becomes a requirement to report that for visibility. That is the one thing I feel is potentially lacking and longer-term, it can structurally be there.”

Evan Armstrong, president of supply chain consultancy Armstrong & Associates, observed that while there is a lot unpacked from 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 U.S. is positioned for growth and to have a more resilient supply chain,” he said.

And Eric Oak, research director for global trade intelligence firm Panjiva, said 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 anyways, given the rising trend in imports over the past decade, but getting additional funding won’t hurt expansion plans,” he said. “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.”