As we approach 2022, the conversation has once again turned-on infrastructure and inflation. While the bipartisan infrastructure bill passed by Congress will result in long-term improvements at U.S. ports, in the short-term, supply chains face a big problem. Backlogs of intermodal containers have been plaguing the U.S. and – indeed – the world. Near-term government efforts to reign in the crisis are patchwork.
The problem is that imports at U.S. ports are expected to remain extremely high for the remainder of 2021 and possibly well into 2022. Retailers are working overtime to move merchandise from docks to shelves, but the demands of the holiday season put a huge strain on retailers, shippers, manufacturers, and consumers.
Ports Are Busier Than Ever
The Port of Savannah, Georgia – which is a port not many people have on their radar – recently broke a record for Southeast and Gulf Coast container terminals. By the end of the year, it will have moved 5 million twenty-foot equivalent containers, smashing its previous day record every day until the end of the year.
Dockworkers are unloading ships as fast as they can. But the bottleneck lies in moving those containers out of the ports to make room for the next ship. Ports need to work on creating better empty return procedures, procuring more chassis, and coordinating better with truck drivers, rail workers, and warehouse workers.
Still, much of the congestion can be traced to Southern California ports. With more than 70 ships still waiting to dock at the Ports of Los Angeles and Long Beach just this past week, getting the containers moved out is an ongoing problem.
Ongoing Efforts in California
While President Biden has announced a deal to allow the Port of Los Angeles to operate 24 hours a day, seven days a week, the supply chain has not yet felt the effects of that change. More hours won’t help if truck drivers don’t, can’t or won’t take advantage of the off-hour’s appointments. There have been some suggestions to waive port fees for truck drivers on nights and weekends. The goal is to help incentivize off-peak use.
And there may be some signs that the backlog is beginning to ease. On November 1, 2021, the Ports of Los Angeles and Long Beach reported 127,000 containers sitting on the docks for 9 days or more. By November 8, 2021, that number had dropped to 101,000. In that week, the dock cleared more containers than ships brought in.
Another option is to switch up the Pier Pass fee model. The model was originally designed to incentivize off peak hours and reduce emissions. But when terminal operators changed it to a flat fee system, truck drivers took advantage of it less. They are not considering changing it again to waive the current fee during nights and weekends and to do so for the remainder of the season.
The goal is to get more containers picked up during low-traffic evenings and weekends. This allows trucks to move the containers off quicker. Of course, terminal operators would also have to fully staff nighttime and weekend shifts. If coordinated properly, it can be done.
Coordinated Efforts on Port Backlogs
The White House has also made a big push to get retailers and other shipping users to adjust their schedules. Already, companies from Walmart to Target and Home Depot have committed to increase their deliveries to off-peak hours.
Even more, the administration is already putting dollars into infrastructure improvements that might decrease the backlog. The U.S. Army Corps of Engineers is scheduled to begin around $4 billion worth of construction work on coastal ports and inland waterways as soon as the first month or two of 2022.
Efforts are also underway to standardize data sharing and interoperability requirements for shipping lines, terminal operators, shippers, railroads, trucking companies, warehouses, and cargo owners. It is an initiative that could change the way supply chain participants interact with each other and share information.
Repurposing Unused Funds
California processes almost half of all container volume coming into the United States. As a result, most of the spotlight has been on the backlogs at California ports. Yet, East Coast ports also continue to do record-setting volume, as we mentioned earlier at the port in Savannah.
The next step will be for the Georgia Port Authority to work with the Department of Transportation to set up five pop-up container yards around Georgia and North Carolina. The yards will be accessible by rail or truck. And they will be able to accommodate over half-a-million containers over the course of a year.
The White House is providing the DOT with funds and logistics to help solve the supply chain disruptions and find a home for containers. And they do this by providing flexibility in the way grant money is allocated and spent.
Infrastructure Funding Comes to Ports and Intermodal
Expect to start seeing a lot of construction coming to a road or bridge near you. According to recent reports, some $17 billion from the infrastructure bill is set to begin going to port and waterway projects later this year. In a fact sheet, the White House states that the coming spending 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. Modern, resilient, and sustainable port, airport, and freight infrastructure will help improve efficiency, reduce costs, and support U.S. competitiveness by removing bottlenecks and expediting commerce, while reducing greenhouse gas emissions and the environmental impact on neighboring communities. The plan will strengthen supply chains by investing almost $50 billion in our ports and airports on top of expanding existing programs that support freight investment across modes.”
The goal is for the $17 billion to be used in the following ways:
- Address repair and maintenance backlogs.
- Reduce congestion and emissions near ports and airports.
- Encourage electrification and the use of low-carbon technologies.
And keep in mind it is not just the coastal ports that are seeing problems. Inland terminals, such as the inland domestic port in Chicago, have also been overwhelmed with containers.
Intermodal and Rail Freight
Money from the infrastructure bill will also be put towards upgrading rail and intermodal freight facilities. Approximately $10 billion is set to be spent on grant programs for highway and rail projects. Contractors will be directed to focus on programs critical to the efficient movement of goods, safety, efficiency, and reliability.
Industry advocates have been promoting the package. The Intermodal Association of North America issuing a statement praising the provisions within the infrastructure package. Some highlights include $567 billion allocated specifically to prepare U.S. infrastructure for the future of freight movement.
Finally, the bill directs the DOT to create an “Office of Multimodal Freight Infrastructure and Policy.” An office created to provide coordination on advance major freight projects. Industry insiders point to this as a positive outcome from the many trucking provisions packed into the infrastructure bill.
Infrastructure Boosts the Industry
The current interstate highway system and infrastructure were laid down after World War II. It was built to 1950s specs. Estimates used were for traffic density and freight patterns from the time. They did the work well, but they were unable to predict the traffic loads of today. The infrastructure bill changes all that.
Expect to see the massive new spending priorities from the infrastructure bill appearing somewhere near you. Much that is in the bill has a direct impact on trucking companies. Just consider the number of vocational trucks alone that will be required to complete these massive construction undertakings.
As infrastructure projects get completed, truck drivers can look forward to better, safer, less-congested roads for long-haul and regional-haul truckers. Road users and trucking companies can also expect improved freight efficiencies as roads, bridges, ports, and rail assets are improved. These moves point to a net win for everyone involved in the movement of freight.
No matter where you stand on the political spectrum, just about everyone agrees that getting something done on infrastructure was long overdue. Now, industry and politicians alike are banking on big changes to come, changes that will make everyone’s lives easier. Some are even saying that we may see another boom period for the trucking industry. Only time will tell, but here at the QuickTSI blog, we wouldn’t bet against it.