Congressional Republicans Provide a Way Forward on Supply Chains

I n a new report out today, the Republicans on the Joint Economic Committee have provided a way forward on supply chains that addresses some of the root causes of America’s transportation inefficiencies. The report, authored by senior economist Jackie Benson, advocates port automation, deregulation, and worker flexibility.

You know it’s serious because it also advocates repealing the Jones Act.

Much of the Biden administration’s response to the supply-chain crisis has been nonresponsive to what ails us. That’s because there’s not much the federal government can do to help in the first place, and the few things it can do to help are ruled out by Democrats’ progressive ideology.

Some Republicans have supported protectionist proposals that would not help the situation, either. (Looking at you, Josh Hawley.) The report takes aim at them right away, saying that “restricting trade would lower our standard of living by reducing productivity, limiting the availability of essential goods, and increasing costs for American families.”

Instead, the report argues that the way forward is in addressing the root causes of our inefficient transportation systems, many of which are decades old and carry no obvious partisan valence.

In an emailed statement, JEC ranking member Mike Lee told National Review, “Costly regulations are increasing prices and delaying the process of getting everyday goods off ships, onto trucks, and into stores. Streamlining or suspending these regulations on ports, ships, and trucks would help alleviate the supply-chain crisis and give families much-needed relief.”

There’s no Democratic or Republican way to unload a ship, and our ports are some of the least efficient in the world at doing so. The report nails the reason why:

A significant difference between Asian ports with high productivity and U.S. ports with low productivity is their automated terminals — the places where boats pull in to load and unload cargo. For instance, the port of Quingdao, home to China’s first fully automated terminal, is one of the most efficient ports in the world. Similarly, one of the world’s most automated ports in Rotterdam, Netherlands, is 80 percent more productive than the port of Oakland, California.

The United States, which has the greatest tech companies in the world, should not have some of the least technologically advanced ports. The report notes that in the few places where automation has been implemented here, it has delivered great results:

Earlier this year, the port of Long Beach completed the automation of the terminal Pier F, which will enable the port to process an additional 1 million containers each year. Two other largely automated terminals in Long Beach and Los Angeles have the fastest cargo turn times within their respective ports.

The report also gives attention to the relatively dry regulation fixes that will help get cargo moving. It references the dual-transaction rules in Los Angeles and Long Beach, local regulations that make truck scheduling more difficult; it references new regulations that restrict which type of chassis may be used to pick up containers; and it references the container-stacking rules that are part of Long Beach’s zoning regulations. None of these regulatory fixes will get politicians glowing recognition, but they will go a long way in actually making a difference in getting cargo moving.

For federal regulations, the report addresses two of the biggest and longest-standing laws that make American shipping uncompetitive: the Jones Act and the Foreign Dredge Act. It makes sense to wonder why 40 percent of American imports arrive through one port complex on San Pedro Bay. In the decades of increasing trade with Asia, why haven’t we built any new ports to accommodate the increased volume? The report answers that question head-on:

[The Jones Act and the Foreign Dredge Act] discourage the expansion of ports by making dredging unaffordable, and they explain why U.S. dredging activity has decreased over the last 50 years while costs per square cubic yard of sediment removed have steadily risen. The prohibitive cost of dredging is a key reason why the ports of Los Angles and Long Beach are the only ports currently large enough to fit many of the vessels that transport goods to the United States.

The report notes that Mike Lee has already introduced legislation to repeal both laws. These protectionist laws have done about 100 years’ worth of damage to American competitiveness, and their effects won’t be undone overnight. But repealing them would essentially legalize port expansion, which would make the American economy much better off in the long run.

One of the reasons these laws have been so durable is the outsize influence of the maritime industry in Washington. Both Democrats and Republicans have kowtowed to its representatives in the past, and a new report from AEI by Vincent Smith and Philip Hoxie ranks water transportation as the third most politically influential industry. Finally standing up to the industry and repealing the Jones Act and the Foreign Dredge Act would be a significant step in the right direction — and it demonstrates that this report is serious about addressing what really ails American transportation.

Republicans like cutting taxes, and President Biden has even said he wants to cut taxes for the middle class. The report offers a way to do that: “Repeal tariffs on steel, aluminum, chassis, and semiconductor chips, which drive up costs and reduce the availability of goods that are essential to the U.S. transportation industry.” These tariffs have had years now to demonstrate their supposed positive effects. They aren’t weakening China, and they are raising prices for Americans. Eliminate them so the American logistics industry can more easily acquire the capacity it needs to deliver the goods.

The report also points to vaccine mandates as the wrong policy for the transportation industry, which is already struggling to hire enough workers as it is. The vaccines are good, but mandating them for truck drivers should not be the priority right now. With a bipartisan majority in the Senate opposing Biden’s employer vaccine mandate, it seems that more politicians are coming around to that view.

This report provides concrete actions that the federal government can take to help mend America’s supply chains. It’s a fleshed-out version of the “next supply-side agenda” that Matthew Continetti argued for in October. If Republicans retake Congress next year, they should pass the proposals in this report and dare Biden to veto them. Even if he signs only a third of them into law, it will be an improvement over the status quo.