Democrats’ preferred method of solving problems isn’t going to be the reason that our ports get moving again.
Democrats’ preferred method of solving problems isn’t going to be the reason that our ports get moving again.
T he Biden administration is trying to spin a story of progress on the supply-chain crisis. It’s not working.
As Jim Geraghty highlighted in the Morning Jolt today, many businesses all across the country are facing shortages of a variety of products. As I pointed out last week, the supposedly shorter queue of ships waiting to unload at Los Angeles and Long Beach is the consequence of a different queuing system, not better efficiency. The line is actually longer than it was three weeks ago, and the timeliness of trans-Pacific freight is the worst it has ever been.
On some questions, such as financial regulation, the Biden administration has been much farther to the left than previous Democratic administrations. But on port congestion, its approach has been conventional, old-school, government-is-here-to-help Democrat.
The federal government’s response to the supply-chain problems was to create a task force. For ports, it appointed John Porcari as envoy. Since earning his master’s in public administration at SUNY Albany, Porcari has been Maryland’s deputy secretary of transportation, Maryland’s secretary of transportation (twice), and United States deputy secretary of transportation. In other words, he’s a career transportation bureaucrat. After leaving government, he was president of advisory services at WSP, a consulting firm in Washington, D.C. (To give you a flavor of the kind of outfit WSP is, its website reads: “We are the sum of our collective passion, vision and expertise. Discover the people, purpose and stories that are helping shape the organization we are today and the one we are designing for the future.”)
Involving someone with state experience was a wise idea, not least because state transportation officials actually do most of the governing on transportation issues in the U.S. Porcari is also sensitive to some of the real problems with infrastructure, having bragged in 2017 Senate testimony about work he oversaw as U.S. deputy secretary of transportation to speed up the environmental-review process for infrastructure projects.
He spoke of the new Tappan Zee Bridge project, which involved special designations that allowed the environmental-review process to be completed quicker than normal (only 13 months!). “This was a significant accomplishment, bringing no less than eight federal agencies with decision-making authority together to deliver a critical, high-priority project,” Porcari said. That is indeed impressive, and it’s good that the process was expedited.
But it didn’t seem to have occurred to Porcari that the real problem was that there were eight federal agencies with decision-making authority in the first place.
His thinking was on display in a recent Bloomberg podcast interview summarized today by FreightWaves. He spoke of progress on supply chains. What exactly does progress mean to him? It means being an “honest broker” and facilitating communication. Porcari said:
The way we have operationalized this is that we have calls three times per week and we have everybody on those calls: the ocean carriers, terminal operators, the railroads, trucking companies, the Federal Maritime Commission, the Surface Transportation Board, the leadership for both ports — everyone who plays a role in the goods movement chain — and we literally are fostering real-time conversations.
That’s terrific, but we aren’t going to conference-call our way out of this crisis. In Porcari’s telling, it doesn’t seem the administration has done much more than talk. The FreightWaves story still points to the decision to operate 24/7 and the decision by Long Beach to waive its container-stacking regulations, which occurred in mid to late October.
Those were both correct things to do. But the 24/7 operations have not really happened. Saying people should be working 24/7 is not the same as their actually working 24/7. As Supply Chain Dive has been documenting since September, transitioning to 24/7 operations is a very slow process that involves a multitude of decisions by private businesses — all of which have to completely change the way they operate. Businesses also have to make all these changes amid a tight labor market. “There is only one terminal trying the concept so far, with few truckers showing up during the late overnight hours,” FreightWaves reports. So while 24/7 was the right thing to do, we have yet to see any of its benefits because it hasn’t actually happened.
Long Beach’s waiving its container-stacking regulations was also the right thing to do, and it represents the right kind of mindset to get us out of this crisis. But it was done by the city government in Long Beach, not the federal government. FreightWaves includes this tidbit in its story: “Christopher Koontz, the deputy director of development services, confirmed in an email that Long Beach consulted with White House staff about the regulatory change.” So again, the White House is taking credit for a conference call and claiming it as governance.
Porcari tried to claim success by saying that the White House had worked with port authorities to implement a surcharge on containers sitting at port for too long. This has a trace of market reasoning in it (if you want less of something, make it more expensive). But it doesn’t make much of a difference, as far as incentives go. The surcharge was to be levied on ocean carriers. It’s not as though they were overjoyed that their cargo was stuck for days and changed their minds when the surcharge was announced. The relevant constraint was on the space for storing containers and the ability of truck drivers to transport them. The surcharge changed nothing about those constraints.
The surcharge was also never collected. It was announced on October 25, supposedly effective November 1. No fees were collected on November 1, and collection has now been delayed three times, which means the surcharge isn’t a binding constraint on anyone. Threatening to take money from people who aren’t responsible for the problem only to make clear a few days later that you won’t actually do it is not going to make people behave differently.
Porcari also pointed to a “new strategic partnership” with California to “accelerate development of major freight projects.” The federal government will be loaning California $5 billion to give the state “a hunting license for the first time ever to actually build a program of projects, not just at the ports, but inland from the ports.”
That’s more than talk, but it fails to grapple with the actual problem in California, something that Porcari knows about from his experience with the Tappan Zee Bridge project: environmental regulations. California’s are some of the strictest in the country and they’ve made building projects nearly impossible for years, whether it’s the publicly financed high-speed-passenger-rail project or a privately financed project to build a new intermodal railyard near the Port of Long Beach. California also doesn’t need more money. In November, the state’s Legislative Analyst’s Office projected a $31 billion budget surplus for fiscal year 2022–23.
It should be said that the conference-call approach is better than the federal government’s intervening in harmful ways, of which there are plenty. “Don’t just do something; stand there!” is pretty good advice for the federal government in this situation. Ports are very complicated public–private partnerships, with “public” mostly referring to state and local governments.
People in the supply-chain industry in California weren’t waiting for a phone call from John Porcari to get their act together. They were already quite upset that shipments were being delayed, and they were scrambling to do what they could to improve the situation. Private investment has been flowing into the sector at record levels. Anything the federal government can do to get out of the way should be welcomed. But nobody at the White House has talked any new trucks, chassis, cranes, or trains into existence, and there’s no such thing as a magical thrice-weekly conference call to get things moving again.