WE KNEW IT WAS COMING - IN MY OPINION
From the desk of Captain Jeffrey Monroe, MM, AMPE
The current supply chain crisis should not be a surprise to anyone. We were talking about it over a decade ago. The first indicators were the apparent shortage of truck drivers. In addition, retirements kicked in, and the Electronic Logbook came into use. Trucks from Canada were being turned away by US Customs, since a number of drivers were not Canadian. The drivers were from places like Eastern Europe, who could not meet immigration requirements. Recruiting for drivers remained at the local level, instead of a strong push by the trucking industry to make more people aware of the shortage.
The next indicator was the demolition of old warehouse spaces to make room for containers at ports. Their slow replacement by the new concept of “fulfillment centers” meant delays started to pick up at ports throughout the U.S. Lines at queuing, as well as local port traffic and turnarounds in terminals also increased. We were seeing times between 60 to 90 minutes for a truck to cycle through a terminal at some of the larger ports once they got through the gate.
The shift from chassis ownership to leasing companies added to the mix. Chassis conditions are getting worse, according to the trucking industry. The general poor condition led to additional delays, as chassis were often found to have problems that required changing out before a container could leave a port.
Rail traffic was already congested at numerous locations throughout the network. Then, the requirement to focus on a new and safer tank cars took prominence after a significant rail pipeline accident in Canada. Rail car manufacturers shifted to replacing tank cars under new government specifications, instead of building the spine cars needed for increasing traffic volumes. As old spine cars began to age out, they could not be replaced fast enough nor keep up with demand.
Port terminals work 24/7 in most cases, but gate hours—which are expensive to keep open beyond regular hours—pushed up the volumes in terminal storage. “We made more money on demurrage than on wharfage,” noted one terminal operator before the pandemic hit. Add to that decreasing warehouse capacities, labor shortages across the entire transportation spectrum, limited operating hours for warehouses, lack of storage outside for containers in secure spaces, slower customs clearance due to labor shortages and increased volumes, a buildup of empties in various Midwest and northern ports with demand increasing in southern ports but little desire to cover the cost of repositioning, and it’s easy to see there’s a problem. Did I miss anything?
And then, the Pandemic hit, and the increased demand clogged up a system already facing inefficiencies. There is certainly a lot of finger-pointing going around, and as usual, the national press only tells a portion of the story. The Ever Given stories or LA/LB congestion hit the headlines on occasion, but the press rarely mentions the ever-changing question, how can this be fixed?
Now that the “crisis” is here, the government has jumped in and created some task forces and focus groups. I have little confidence, however, that this will change anything. It’s a band aid on a major bleed, and it is not the fault of just one administration; it goes back many administrations. Those of you who have sat in my seminars have heard the comments I have made about national policy: “The last time the United States had a cohesive transportation policy was when Harry Truman was President.”
Unlike most major countries in the world, the U.S. does not have a comprehensive approach to transportation that involves all modes—rail, roads, runways, and ports—and embraces not just infrastructure, but the entire framework of national and international logistics. Approximately 90% percent of our cargo tonnage is moved domestically, while 10-12% is international (off and on). We continue to think modally and not systematically, which is the true foundational issue for today’s issues. COVID has shown us the disconnect in our transportation system, and until our elected officials finally put a nationwide policy into place, we will continue to operate in fits and starts. You can’t fix it by just throwing money at it.
Our call to our elected officials, blue or red, is for them to take up the development of a national policy that embraces and connects our entire transportation system, and create a plan to consistently fund the related infrastructure.
We need to focus on all the elements of our national logistics network, instead of reacting to whoever the strongest voice in the lobby. We need to recognize that ports are as important as roads, rails, and runways. But most of all, we need to realize that each element of the system, from truck drivers to longshoremen, needs to be taken into account holistically. A new generation must be prepared to take up our transportation industry.
While I am not really a fan of big government, I do believe that government leadership is an essential element of getting things fixed, which is critical now. My biggest fear is that as the system slowly returns to normal—sometime next year, no doubt—we will forget what went wrong this time and not fix things when we have the chance. So, a simple message to our current DOT Secretary and this administration, don’t just keep the seat warm. Think systematically, and let’s pull a national policy together with the help of the industry that addresses the current problems and, more importantly, prepares us for the future.