The White House announced a new “action plan” Tuesday aimed at expanding the capacity of U.S. ports and inland waterways, as persistent supply chain congestion slows goods deliveries and fuels rising prices.
Most of the new activity involves $17 billion in ports funding included in the bipartisan infrastructure legislation that Congress approved last week. But the administration plans within the next 45 days to award $243 million in new port and marine infrastructure grants, according to senior administration officials, who briefed reporters on the condition of anonymity.
Port officials around the country also will be able to redirect leftover money from previous federal grants to new projects aimed at clearing bottlenecks, under a Department of Transportation initiative. At the Port of Savannah in Georgia, officials plan to use $8 million to set up five inland lots to absorb thousands of shipping containers clogging the docks.
Containers arriving in Savannah have been sitting on the dock for an average of 8.5 days, more than twice the port’s goal. Now, officials plan to clear space for incoming freight by shipping much of the backlog by truck and rail to new overflow lots in Georgia and North Carolina, according to senior administration officials.
“The immediate $8 million in Savannah is not a big deal, but it might head off bigger delays there, which are not as bad as L.A., but have been growing,” said William Reinsch, author of a new supply chain study for the Center for Strategic and International Studies. “I’ve been pretty negative about (the administration) lately, but this sounds like somebody actually thought through the problems and came up with some useful steps forward.”
Still, the administration’s effort to highlight actions that will have limited immediate impact reflects the challenge confronting the president, who is scheduled to visit the Port of Baltimore on Wednesday. Even as supply woes spark voter angst, the private companies responsible for the ports, trucks, terminals and trains that make up the nation’s goods pipeline operate beyond easy federal direction.
President Joe Biden spoke by phone Tuesday with the chief executives of top retailers and shipping companies about measures the government and industry could take to alleviate the supply chain crisis. The heads of Walmart, Target, UPS and FedEx described for the president unspecified steps that they are taking to speed goods through the system and to ensure that store shelves “are well-stocked this holiday season,” the White House said.
Despite a flurry of recent White House pronouncements – including talk of Southern California ports eventually operating on a 24-7 basis – bottlenecks persist. On Monday, a near-record 77 container ships were anchored off the ports of Los Angeles and Long Beach while waiting for dockside space to become available.
In Savannah, more than 30,000 containers full of imported products for Americans are sitting on the docks, more than 50 percent above the port’s operational goal, according to the Georgia Ports Authority website.
The nation’s ports, trucks and trains are handling a record volume of goods. But chronic congestion and soaring freight costs are driving prices higher for goods and services throughout the economy. Wholesale prices in October were 8.6 percent higher than one year ago, the sharpest increase in the 11 years that such records have been kept, according to the Bureau of Labor Statistics.
Snarled supply lines accounted for 60 percent of the increase, according to economist Mahir Rasheed of Oxford Economics.
“The persistent mismatch between supply and demand will remain a principal driver of elevated inflation as capital and labor shortages improve only gradually heading into 2022,” he wrote in a client note.
The Federal Reserve continues to expect inflation to ease next year, as does the Biden administration. But higher prices, for goods such as gasoline, food and rent, are taking a toll on the president’s public approval ratings.
In the next 90 days, administration officials plan to prioritize ports of entry for $3.4 billion in modernization projects and have the U.S. Army Corps of Engineers identify targets for more than $4 billion “to repair outdated infrastructure and to deepen harbors for larger cargo ships,” according to a White House fact sheet.
Officials also are taking steps to address a lack of data sharing by supply chain participants. Compared to the world’s most efficient ports in Europe and Asia, the U.S. system lags in exchanging data to support a uniform forecast of what equipment will be needed and when for container vessel unloading.
“This is a much bigger problem than people had thought, and the lack of good information prevents importers and exporters from making sound decisions,” Reinsch said.
Federal regulators will call for suggestions on how to standardize data exchange requirements, calling it “an important first step” in enabling more fluid cargo movements.
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