Massaging the messaging has been a top priority for the Biden administration on supply chains. While talking to the press in early November, President Biden said, “By the way, you all write for a living. I haven’t seen any of you explain the supply chain very well.” That doesn’t seem to have been a random gibe by the notoriously loose-lipped president. A report from last week revealed that members of the National Economic Council and Port Envoy John Porcari have been in conversations with members of the media in an effort to put a positive spin on the economic news.
No amount of spin will change the facts. Despite indications that the line of ships waiting to be unloaded at the Ports of Los Angeles and Long Beach was shortening, it was actually just an artifact of a new queuing system the ports are using. The Marine Exchange of Southern California has since updated its official count to reflect the new queuing system, and the backup stands at 95 ships as of December 10, which is near the record high.
The timeliness of transpacific ocean shipping, as measured by Flexport, is at its worst ever. As of last week, it takes a container 106 days to be loaded onto a ship in Asia, cross the Pacific, and leave its destination port in the U.S. on some other mode of transportation. In 2019, the same process took around 45 days.
To be clear, these massive backups are not Joe Biden’s fault. As Scott Lincicome of the Cato Institute has written at length, “America’s ports problem is decades in the making.” And of course, global trade involves other countries over which Biden has no control.
But progressive ideology does not allow for the possibility that some things are out of government’s control, so Biden feels he has to do something. That’s where his go-to solution for everything comes in: government spending.
He already got the $550 billion infrastructure bill, which the White House claims will “make the fundamental changes that are long overdue for our ports, airports, rail and roads to ensure that our supply chains are more resilient and efficient from future shocks.” Now he wants the $1.75 trillion Build Back Better Act, which the White House says includes “targeted incentives to spur new domestic supply chains” and other “targeted investments” in “supply chain resilience.” (Someone must have told them that putting “targeted” in front of words makes them sound better.)
Supply chains do not suffer from lack of federal spending. Almost none of the assets involved in transporting goods is owned by the federal government. Most are privately owned and operated, and the public-sector portion is dominated by state and local governments. Between state aid in the American Rescue Plan Act and surging tax collections, state and local governments are flush with cash. California is set to run a $31 billion surplus this year. If money is the issue at southern California’s ports, the folks in Sacramento have plenty to work with.
The supply chains also do not suffer from an insufficiently powerful Federal Maritime Commission. The House of Representatives has passed the Ocean Shipping Reform Act, which gives the FMC more regulatory authority and makes it harder for ocean carriers to refuse American exports. It’s being pitched as a response to the supply-chain crisis, but it will do nothing to ease it.
Our supply chains suffer from outdated labor-relations law, a 250 percent tariff on truck chassis, and environmental regulations that prevent capacity expansion and increase the costs of trucking. They suffer from the Jones Act, which makes moving goods by water between two U.S. ports prohibitively expensive. These are government restrictions that only government can remove.
Our supply chains suffer from some of the least efficient ports in the world. In a global ranking of 351 container ports, the Port of Los Angeles was No. 328, and Long Beach was No. 333. Only four U.S. ports were in the top 100. Why? Longshoremen’s unions that oppose automation. Dockworkers benefit with high pay (after working for five years in Los Angeles, almost $190,000 per year, plus $110,000 worth of benefits), while the rest of us — including truck drivers — lose out through increased shipping costs and transit times.
These are problems that President Biden did not cause, but they are problems he and his progressive administration are ill-equipped to fix. He has been (strangely) wedded to President Trump’s protectionist trade policies, even when they are clearly harmful, as in the case of the chassis tariff. His party’s increasingly radical environmentalism will not abide any regulatory cuts to reduce construction costs and trucking costs. His transportation secretary pledged fealty to the Jones Act before his tenure even began. And Biden is so enmeshed with organized labor that Democrats wrote into the infrastructure bill that none of the money earmarked for modernizing ports can be used on automation.
With the few things the federal government could actually improve ruled out, the Biden administration is left with asking cargo terminals to work 24/7 (they haven’t) and leading conference calls (which don’t move cargo).
There’s not much the federal government can do to help, but there is plenty it could do to make things worse: price controls, additional tariffs, and more stringent environmental regulations, just to name a few. If Biden won’t be part of the solution — and it doesn’t seem that he will in any significant way — he needs to at least avoid contributing to the problem. The best thing for him and his administration to do given their ideological predilections: Stay far away from San Pedro Bay.