Driving Solutions to the Tangled Supply Chain

EVERY MEMBER I have talked to this year has said it has been the busiest they can remember. Brokers and 3PLs are especially critical during volatile times, and 2020-2021 has been volatile indeed. When the supply chain challenges routinely make the front page of The Wall Street Journal for weeks in a row, Congressional hearings are held, while President Biden and Department of Transportation Secretary Pete Buttigieg strive to appear engaged and involved. It also means that it is not just brokers and 3PLs who understand the complexity of the supply chain—the rest of America begins to understand as well.

Whether asked by the trade press, or Capitol Hill, we have outlined the supply chain headwinds as we see them:

• It is a perfect storm: there is not just one reason for the current crisis, but numerous factors that have combined to create the maelstrom we are experiencing;
• The efficiencies of the “Just-in-Time” network, where the freight network has been optimized, can turn negative when the normal flow of commerce is disrupted, and slack in the system is needed;
• The labor shortage is at every level of transportation transaction and does not just include truck drivers. Dray drivers, warehouse employees, railroad workers are all in short supply. And the shortage of labor at shippers’ facilities also creates scarcity on the supply side.
• Regulatory constraints, like AB5 in California, vaccine mandates, or age restrictions on truck drivers can further exacerbate the tightness in the marketplace.

These challenges feed on themselves: Congestion at ports leads to a low inventory of critical goods. Some of those goods are parts needed for trucks, containers or chassis. Without an abundant supply of trucks or chassis, containers stacked at the port can’t move. If containers can’t move, incoming ships can’t unload critical goods.

We have been outspoken about the problems, but we have been forthright about potential solutions as well:

• A defined, transparent, and data-driven Motor Carrier Safety Selection Standard would enhance safety, expedite carrier selection for 3PLs and brokers, and afford previously unrated carriers an opportunity for greater exposure.
• Scaling back California Air Resource Board environmental mandates would stop the loss of motor carriers who refuse to operate in the state, allowing for rebuilding capacity.
• Laws like AB5 in California should not proliferate: AB5 threatens the owner-operator model, will drive capacity further out of the marketplace, and could destroy our members’ ability to conduct business. TIA has submitted an amicus brief as the quest from the California Trucking Association to invalidate AB5 has reached the Supreme Court.

These solutions are themselves a challenge but an essential part of TIA’s advocacy portfolio, and we will continue to push on them in 2022. Other ideas to unwind the tangled supply chain include greater automation at the ports, pilot programs that encourage drivers aged 18-21, and the end of government transfer payments which create disincentives to work.

2021’s capacity crunch and supply chain snarls are anticipated in 2022. TIA will continue to be an industry thought leader because of the visibility you, our members, have into the affected modes and the valuable insights you all have into how best to address the crisis. I hope you have a wonderful holiday season, and we look forward to all our work together in 2022.