Government mandates won't fix the supply chain

Our supply chain is under duress. While we made it through the holiday rush, we are by no means out of the storm. Containers continue to pile up in ports and warehouses, while “out of stock” notifications remain prevalent.

Americans are upset and these problems are undoubtedly frustrating, but in the rush to “do something” policymakers can actually make things worse. Our current congestion can only be unwound if every link in the chain does their part to improve operations and coordination with their service partners and customers — not, as some lawmakers are encouraging, from top-down government mandates on one small part of the chain.

Before charting a way out of the current situation, we need to first understand the root of the problem. The supply chain is not under duress because of any inherent flaws, but because of unprecedented demand during an unparalleled pandemic. Every part of the supply chain — from ship to port to train to warehouse to delivery truck — is being overloaded. Add in periodic shutdowns due to virus outbreaks and persistent labor shortages, and U.S. landside capacity cannot keep up with the volume of import cargo. 

In simple terms, Americans are ordering a lot of stuff and there isn’t anywhere for it to go or enough workers to move it.

Ocean carriers are doing their part to alleviate this congestion, deploying every container ship available. But their efforts don’t stop when a ship pulls into port. Carriers don’t want goods sitting in marine terminals any more than consumers do, so they’ve worked with the Biden administration’s Supply Chain Disruption Task Force and Port Authorities to get importers to pick up their cargo as soon as possible — resulting in a 37% reduction in long-dwelling containers. They’ve introduced new incentives to keep goods moving through the system and make space available for American farmers and manufactures to get their goods to market. 

And to free up terminal space and increase chassis availability, “sweeper ships” have picked up some 20,000 empty containers and repositioned them to be filled with the clothes, dishwashers, car parts, and other goods U.S. businesses and consumers are purchasing.  

Despite these tremendous efforts, which continue every day, there is still more work to do. Unfortunately, some policymakers have advocated for new laws and regulations that miss the problem, undermining the efforts of the private sector and creating further disruption. The House-passed Ocean Shipping Reform Act of 2021 would empower the Federal Maritime Commission (FMC) to interfere with private service contracts between carriers and their customers. Far from relieving congestion, this interference in the marketplace would throw international shipping into chaos with detrimental consequences up-and-down the entire supply chain. 

Here’s the reality that many politicians are missing when they shortsightedly dictate new regulations in the name of political expediency or out of frustration with the current supply chain challenges: Global trade is one interconnected network employing the same ships and containers in continuous service loops. You can’t favor one set of stakeholders without upsetting the balance of the entire system: delays would increase, service would be reduced, and the already-present bottlenecks would grow worse. When a government regulator puts their thumb on the scale, it is American customers and businesses that pay the price. 

What the global supply chain needs now is for the Senate to take a careful and targeted approach. Instead of knocking down a system that is already running at max capacity, let’s find ways to make each part of the supply chain more efficient and resilient with better data sharing and optimization. Lawmakers should encourage the FMC and other regulatory bodies to continue promoting communication, innovation, and collaboration across sectors. And companies need reassurance that regulatory frameworks are stable so that they can be agile in managing their part of the bigger chain. There is no quick fix and attempts to find one only risk exacerbating the situation.  

COVID-19 has revealed the vulnerabilities in our global network of trade, from sea to land to the front door. Yet amidst the finger-pointing and blame game, America’s supply chain has proven remarkably resilient. That idea can be hard to square with images of waiting ships and empty shelves, but the fact is that the international ocean and U.S. intermodal transportation system is moving more cargo right now than at any time in history. And this historic situation has been met by a momentous response. Working together — ships and stores, trains and trucks, public and private sectors — we can manage the current influx and set the system up for long-term success. 

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