NASHVILLE—Port congestion in the U.S. and across the globe is nothing new. Longstanding challenges combined with new supply chain disruptions caused by the pandemic have carriers, railroads, shippers, and consumers on edge, with all eyes on when these kinks will smooth themselves out.
John Butler is the president and CEO of the World Shipping Council (WSC). He explained that port congestion typically has been centered around a labor or weather issue, with many significant disruptions on the West Coast in the past. "Significant" then, however, meant a six-month span and didn't necessarily impact the entire supply chain.
“What we’ve got now is different than what we have seen before because we have saturation across all nodes,” Butler said during American Trucking Associations’ 2021 Management Conference & Exhibition (MCE) in Nashville. “We’ve got a situation where our collective customers aren’t able to pull the goods forward out of the ports because they’ve got no place to put them or no way to send them on to their final destination.”
“The good news, though, is that in the same way this thing kind of got worse over time and one negative challenge would lead to another, when it starts to unwind, I think we are going to see synergies across the supply chain,” Butler added. “If it starts to unwind in one place, it will make it a little better back up the chain.”
During an MCE session moderated by Shelley Simpson, chief commercial officer for J.B. Hunt, ATA President and CEO Chris Spear, Association of American Railroads (AAR) President and CEO Ian Jefferies, and National Shippers Strategic Transportation Council (NASSTRAC) Executive Director Gail Rutkowski joined Butler to address today's supply chain challenges within their specific sectors.
Challenges and collaboration
A unique challenge for shippers, NASSTRAC's Rutkowski said, is that many of them didn’t take the time when they had the chance to thoroughly determine the importance of the supply chain within their own companies. Butler noted that from an international ocean shipping perspective, WSC is seeing the same thing that many are seeing domestically and all over the world.
“The problems we are having here—particularly with port and inland congestion and the difficulties getting labor and keeping cargo and equipment moving as opposed to sitting at a port or customer warehouse—are happening all over the world,” Butler explained. “In order for all of this to unwind, we need to see improvement in ports all over the world at the same time.”
Pointing out that the supply chain is truly integrated, AAR’s Jeffries noted that when any piece of the supply chain can’t operate at full capacity, it has reverberating impacts. The rail sector, he said, has seen unprecedented volumes in the last six months, and this year the rail industry moved a record amount of intermodal freight.
The intermodal yards, however, haven’t been able to keep up with the amount of freight needing to be picked up and hauled out of the yards.
“We were taking in a lot more than could be picked up and taken out,” Jefferies said, pointing to slowing traffic from the West Coast. “One railroad had 20 intermodal trains waiting outside its Chicago terminal just to go in and unload. There are some dramatic steps we are taking and increasing storage capacity around the yards in the central part of the country and trying to motivate pickups. It’s an ongoing battle."
“We generally run 24/7,” Jefferies continued. “Obviously trucking runs 24/7 in the long-haul side, but for other parts of the supply chain, that’s not necessarily the case. When you have a disconnect there, things tend to get kinked up.”
ATA’s Spear said he believes it will come down to collaboration among all nodes.
“I always look at trucking as the glue,” Spear said. “We are involved in so many points along the way throughout the supply chain, so we see a lot as a result of that. The driver shortage/worker shortage is really our front-burner priority and to get more talent into the industry and moving more freight as an outcome of that. We are also seeing some additional elements throughout the supply chain that are just as impactful—chassis shortage, yard space, and the ability to stack containers from two to four was just recently lifted in California so we have more space to position the containers before they are loaded on the chassis or the train."
"It’s a culmination of a bunch of things under that worker shortage pressure that is making a very significant challenge," Spear added.
Short term vs. systemic problems
The supply chain has been dealing with some systemic problems that have been a struggle all along, including the truck driver shortage and certain regulations that have held back productivity.
“Everyone is moving more product than ever before,” Butler said. “The problem is because of the congestion, we are moving product in a very inefficient way in a lot of instances.”
Butler pointed to the Ocean Shipping Reform Act of 2021 as a potential problem. That legislation, he said, was never designed to address congestion, rather it allows the Federal Maritime Commission to mandate what ocean carriers put on their ships and when.
“There’s no way the federal government has the expertise to do that,” Butler noted. “With all due respect, our industry knows how to load ships and move cargo. To get the Federal Maritime Commission in the middle of that is not going to make things better, it is going to make things worse.”
When it comes to working to improve the truck driver experience at shipper facilities and rail yards, Jefferies said everyone in the supply chain wants boxes to move quickly to their final destinations, and no one wants demurrage and detention charges. Demurrage, he said, is a sign of a breakdown in fluidity and, as a result, a breakdown in efficiency.
“Part of really addressing that overarching issue is improving the driver experience when it comes to intermodal,” Jefferies said. “It’s using technology first and foremost so that when a driver comes in, they aren’t filling out paperwork. It’s a quick scan, they know exactly where their container is, it’s a quick drop-off and pickup. That’s better for everybody. It’s better for the railroad and getting things out of the yard. It’s better for the driver and getting turns in any given day.”
Regarding concerns about the ability to keep up with today’s pace of demand from a shipping perspective, Rutkowski said shippers always have concerns and they always will, but the inability to have consistent delivery times is causing inventory issues.
“Even if you can get it there on time, they may not have the warehouse employees to unload deliveries,” she said. “Unless we all work together to help mitigate it on all levels in all areas, it’s going to continue. It will take time, and it will take improving communication.”
The new normal
So, when will things get back to normal for the supply chain? ATA’s Spear projected at least three quarters—if not four—before some of this gets resolved. But he anticipates it will be turbulent along the way.
Jefferies warned that government intervention and new regulations in the middle of a crisis can be “extremely damaging and shortsighted.”
“I would really caution policymakers, the government, and the administration to step back and refrain from that knee-jerk need to get in and do an emergency order here or a regulatory order there,” he said. “It may feel good at the moment, but you’re most likely causing more harm than helping the system overall for the long run.”
As for Rutkowski, she doesn’t necessarily want to go back to normal because normal hasn't been working. Instead, she emphasized the need for the supply chain to unify and work together.
“Shippers need to get smarter,” she advised. “They need to get better about how they communicate and talk to their providers. And providers need to be more forthcoming about some of the issues that may be caused by the shippers. If you don’t tell them, they can’t fix it. That would help, but why would we want to return to normal? It isn’t working.”
