Panelists Try to Picture an End to Supply Chain Snarls

Gold said retailers who answered an NRF survey don't expect supply chain disruptions to subside until the last three months of the year.

Flexport Chief Economist Phil Levy said it's not surprising that ports could not keep up with the pace of imports this year, because capital-intensive businesses are built to serve peak capacity, not a volume past anything seen before. "How does this clear? How do we get out of this?" he asked. "I don’t think we do it without a decrease in demand for goods," he said, but that's not enough. He said if the decrease happens right at peak season for shipping, it won't help then. He said we won't know that the crisis has ended until the time from Asian factory to the U.S. port gets back to its historical average of 45 days. Right now, according to Flexport, the average is 110 days.

Several panelists said that while the Ocean Shipping Reform Act is not a panacea, it would help. Maria Zieba, assistant vice president for international affairs at the National Pork Producers Council, said exporters are facing "last-minute cancellation of shipments," which is something the bill aims to address. She said that's particularly difficult because cold storage facilities at ports are already at capacity. She said exporters are also struggling to find available chassis to move containers.

Responding to a question about the impact of trade remedy tariffs against chassis, and the 25% Section 301 tariffs on chassis, Levy said, "I don’t think it helps in any way to put tariffs on goods that are in short supply. That’s just doing harm to ourselves." He said if it were possible to import chassis more cheaply, "that would help" with the shortage.

Gold added that truckers who work the ports frequently tell him the chassis shortage is a significant contributor to port congestion. He said a 221% antidumping and countervailing duty on chassis came at the "worst time possible. Nobody's bringing in chassis anymore." He said domestic chassis manufacturers aren't going to be able to meet demand until 2024.

Panelists praised the federal government for convening stakeholders and appointing a ports envoy, but they also said that the Federal Maritime Commission needs to do more to fight unfair detention and demurrage.

Zieba praised the Agriculture Department for offering to pay for 60% of the startup cost for a temporary 25-acre export-oriented container lot at the Oakland port, and to subsidize refrigerated export containers by $125 per container. She said fresh pork to Japan leaves from that port, and that carriers have been bypassing Oakland on their return trips. Zieba said the market access that pork won in the Japan mini deal is "at risk if we can't get our containers out of Oakland."

The moderator asked about the impact for importers of the Uyghur Forced Labor Prevention Act, which will flip the standard of proof on the forced labor ban for goods linked to Xinjiang. UPS President for International Affairs and Sustainability Penny Naas didn't speak directly to Xinjiang but talked more broadly about the calls for corporate responsibility. She said the focus has increased on what's known as ESG -- environmental, social and governance -- among customers, companies and the government.

These sorts of "demands have grown exponentially in a very short period of time," she said, and UPS is hearing about these issues often from customers, employees and investors, especially around technologies to combat climate change. But, she said, even though consumers say they care about these issues, "they're sometimes making contradictory decisions," so she said more effort is needed to educate them about the effects of their choices.