The Biden administration’s struggles to alleviate supply chain capacity issues appear to continue with no end in sight. Part of the problem stems from the administration’s limited focus on ports and part of it stems from congressional deadlocks. Could the much needed leadership on these issues come in the form of the new maritime administrator?
Biden Focuses on Ports to Solve Bigger Problems
Throughout October, the President and his Supply Chain Disruption Task Force – including Port Envoy (and former Deputy Secretary for Transport) John Porcari – met with port representatives of Los Angeles and Long Beach and the International Longshore and Warehouse Union (ILWU) to discuss supply chain capacity issues across Southern California. The result of these meetings, as reported in an October 13 White House fact sheet, was that the Port of Los Angeles agreed to expand its 24/7 operations which would be supported. by marine terminal operators and ILWU members at the port.
Following these discussions, President Biden met with the interests of the shippers in an effort to secure their commitment to use these extended port hours. The White House fact sheet indicated that President Biden had obtained pledges (although some pledges were extremely vague) from Walmart, UPS, FedEx, Samsung, Home Depot and Target, to increase their use of off-peak hours for move additional containers from the port to Los Angeles marine terminals.
However, anyone involved in the U.S. shipping industry knows that a myopic focus on expanding port operations will have minimal impact on current supply chain capacity issues. The entire U.S. logistics network – including marine terminals, equipment suppliers, trucking companies, rail operations and terminals, and warehousing – is operating at or above capacity. Driver shortages continue to impact trucking, which, unless addressed immediately, places a cap on the amount of cargo that can be removed from overcrowded marine terminals. Therefore, in the absence of a sudden (and highly unlikely) reduction in demand from U.S. consumers, a whole network approach is the only way to alleviate U.S. supply chain capacity issues.
Despite capacity issues, the infrastructure bill is stagnant
One of the main challenges in taking a comprehensive network approach has been the lack of a single federal authority responsible for overseeing all aspects of the US intermodal transportation network. Transportation stakeholders hoped that the Infrastructure Bill would address this issue through the creation of a new Office of Multimodal Freight Policy and Infrastructure (OMFIP) within the United States Department of Transportation (USDOT). . If the infrastructure bill ever passes, OMFIP would provide a cohesive intermodal planning authority that is sorely lacking within USDOT. OMFIP would be headed by a new Deputy Secretary for Multimodal Freight who, among other responsibilities, would be responsible for (1) overseeing certain subsidy programs for multimodal freight within the USDOT; (2) facilitate information sharing between the private and public sectors regarding freight matters; (3) conduct and supervise research conducted by USDOT agencies on improving multimodal freight mobility; (4) help cities and states develop expertise in freight mobility and supply chain and (5) coordinate with other federal departments and agencies. By creating a unified authority with oversight over the entire U.S. supply chain, the infrastructure bill could address the disconnected planning of federal modal agencies that has contributed to current capacity issues.
Despite the potential desirability of creating an office that could help alleviate supply chain capacity issues, at the time of writing, the fate of the infrastructure bill remains unknown. Progressive Democrats have said they will not support the infrastructure bill until there is agreement on the larger $ 3.5 trillion reconciliation spending bill, which includes measures to tackle climate change, paid family and medical leave, expansion of health insurance and pre-K universal education. Many Republicans and some moderate Democrats view these provisions as “poison pills” leading to an ongoing standoff on infrastructure and reconciliation bills. This stalemate led to a short-term extension of surface transport funding until October 31, which kept much of the USDOT open. However, time is running out to reach a long-term deal to avoid the closure of many USDOT agencies, which would further exacerbate supply chain capacity issues. It is clear that strong leadership is needed within the ring road to overcome these problems.
Biden finally calls on a maritime administrator
Fortunately, additional maritime leadership is on the way as President Biden has finally appointed a maritime administrator after the longest delay of any modern administration. Biden selected Rear Admiral Ann Phillips, USN (retired), to head the Maritime Administration (MARAD), a prominent Navy surface warfare officer who served on the Chief of Staff of the naval operations as Director of Surface Warfare (N86) prior to his retirement. Since her retirement, Phillips has focused on issues of coastal resilience and climate change, most notably in her current position as Special Assistant for Coastal Adaptation and Protection to Governor Ralph Northam of Virginia.
Phillips’ environmental background clearly aligns with the broader agenda of the Biden administration, but his lack of commercial maritime experience leaves many questions as to how his background will translate into the position of Marine Administrator. Despite these questions, Phillips is seen as a very capable leader within the Periphery and his appointment appears to have bipartisan support. As a result, his appointment should receive confirmation from the Senate relatively quickly.
In addition to its role as a promotional agency for the US maritime industry and the US merchant navy, MARAD is responsible for the administration of port-oriented grant programs, including the Port Infrastructure Development Program. Once confirmed, Phillips will therefore play a key role in the federal government’s response to U.S. supply chain capacity issues. Phillips’ challenges won’t end there as she will be tasked with overseeing future efforts to recapitalize MARAD’s aging Reserve Force fleet and complete a myriad of challenges at the US Merchant Marine Academy. I am convinced that she will rise to the challenge and be a staunch defender of American maritime players.