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Cash Market Moves             10/18 12:05

   President Biden Addresses Supply Chain Disruptions

   According to a speech made Oct. 13 by President Biden, two major ports 
agreed to start operating around the clock in hopes of solving the current 
backlog of cargo ships waiting to unload.

Mary Kennedy
DTN Basis Analyst

   The current shipping crisis has been an ongoing fiasco for well over a year 
and it continues to get worse. Shipping containers to load soybeans and other 
commodities have been elusive, especially for many ag shippers, as containers 
were returned to China empty. Railroad yards have been backlogged with 
containers for months. Perhaps the most stunning image of this entire mess is 
full container ships anchored off the Ports of Los Angeles and Long Beach, 
waiting to berth and unload their precious cargo. Terminals are packed full of 
both loaded import containers and empty containers waiting to be loaded onto 
vessels or with export goods. Until there is enough terminal space for those 
ships to unload, they will have to wait it out.

   In an Oct. 13 speech addressing the global transportation supply chain 
bottlenecks, President Joe Biden said, "After weeks of negotiation and working 
with my team and with the major union and retailers and freight movers, the 
Port of Los Angeles announced today that it's going to begin operating 24 hours 
a day, seven days a week. This follows the Port of Long Beach's commitment to 
24/7 that it announced just weeks ago.

   "This is the first key step toward moving our entire freight transportation 
and logistical supply chain, nationwide, to a 24/7 system," added Biden. "That 
means an increase in the hours for workers to be moving cargo off ships and 
onto trucks and railcars to get to their destination."

   "Containerized agricultural exporters rely heavily on the Los Angeles and 
Long Beach port complex to move products overseas. The ports' efforts will help 
regain terminal space by clearing import containers and allow more fluid 
operations for all users," noted the weekly USDA Grain Transportation Report.

   Biden added, "So, by increasing the number of late-night hours of operation 
and opening up for less-crowded hours when the goods can move faster, today's 
announcement has the potential to be a gamechanger."

   According to the statement made by Biden, Walmart announced it is committing 
to as much as a 50% increase in the use of off-peak hours over the next several 
weeks. United Parcel Service and Federal Express, who move up to 40% of 
packages in America, committed to significantly increase the amount of goods 
they are moving at night. Target, Home Depot and Samsung have all committed to 
ramp up their activities to utilize off-peak hours at the ports.

   Mike Steenhoek, executive director of the Soy Transportation Coalition, 
said, "We applaud any effort by the president and any of our national leaders 
to help address our supply chain challenges. We are certainly hopeful that the 
measures announced Oct. 13 and others in the future will help mitigate some of 
the pressure."

   Steenhoek specifically addressed the serious issues facing ag shippers, 
"Because of the pressure to move increased freight with a given capacity, there 
has been increasing pressure on bringing in shipping containers full of 
consumer goods or component parts from China to the United States, unload them, 
and return them to China where they will be reloaded for repeat journey. 
Therefore, there is an increased unwillingness for ocean vessel companies -- 
the owners of the shipping containers -- to allow them to deviate from this 
route in order to be loaded with agricultural or other products for export from 
the United States. This lack of availability is causing significant stress for 
those U.S. agricultural exporters who utilize containers."

   This shipping crisis began back in 2020 when the pandemic hit, creating a 
global supply chain mess, causing labor shortages and outbreaks that shut down 
warehouses or production facilities. When manufacturing came back online last 
year, it was confronted with a surge of demand, said Steenhoek. "Manufacturing 
and the supply chain have been catching up ever since. This has been 
exacerbated by the normal surge of freight during the back-to-school season in 
the summer and in advance of the holiday shopping season. As nimble as the 
supply chain endeavors are, it requires considerable time to respond to such a 
surge in demand. Ocean vessels are very expensive and take a long time to 
construct. Ports have a limited number of cranes and storage facilities. 
Freight railroads are very capital intensive." 

   Steenhoek added, "Arguably the biggest challenge confronting our supply 
chain in the United States is a shortage of labor. Every mode of transportation 
is struggling to fill their labor needs. Trucking, barge, freight rail and 
others are competing with other industries for labor.

   "There has been a persistent shortage of truck drivers for a number of 
years, but it has become enhanced due to the pandemic. Trucking, which requires 
considerable time away from home, is not an appealing occupation for many 
workers.

   On top of all the issues facing the trucking industry, the state of 
California has added another one, Assembly Bill 5 (AB5). AB5 is a law signed by 
Gavin Newsom, the governor of California, that went into effect Jan. 1, 2020. 
AB5 affects independent contractors throughout California, radically changing 
30 years of worker classification and reclassifying millions as employees. 
However, the California Trucking Association (CTA) on Jan. 20, 2020, was 
granted a preliminary injunction by the U.S. Southern District Court, which 
blocks the State of California from enforcing AB5 against motor carriers. The 
fight isn't over yet and here is a link to updates concerning AB5: 
https://www.caltrux.org/ab-5-faq/

   I asked a representative from Boshart Trucking Inc., Tangent, Oregon, if 
regulations like AB5 affected them. Since the company is based in the Pacific 
Northwest, I was told the California law doesn't directly affect them and they 
don't have any bans against owner-operators/independent contractors.

   The company, in a post on their Facebook page related to the current 
transportation supply chain bottlenecks, said, "BOSSCO Trading and Boshart 
Trucking have been in the drayage/export shipping business for over 15 years 
and these challenges are some of the greatest we've faced to date. We heard 
from someone at Tyson Foods who has been in logistics for 45 years and this is 
the worst he's seen.

   "Yes, there is a shortage of qualified truck drivers. The population of 
drivers is an aging population, with few new members joining the workforce. 
Even if they do, container drayage trucking is not an easy job even when there 
isn't a shipping crisis. Having more truck drivers would be a great help, but 
it is not the only solution."

   Boshart Trucking added, "Regulation surrounding topics like clean trucks and 
independent contractors just add more hoops for truckers to jump through and 
added costs get passed on to the customer. If marine terminals are going to add 
extra hours, truckers are going to need those to be consistent in order to plan 
out their weeks without going over their Federal Motor Carrier Safety 
Administration (FMCSA) hours of service, and they need the 
warehouses/distribution centers to have enough staff and longer hours to 
accommodate additional loads as well."

   Owner-Operator Independent Drivers Association President and CEO Todd 
Spencer issued a response after the Oct. 13 White House meeting on the supply 
chain crisis, "Truckers have been working tirelessly to keep the country safe 
and productive throughout the COVID-19 pandemic. They have already been 
operating around the clock but are often restricted by factors beyond their 
control, such as excessive detention time and the lack of readily available, 
safe parking for their trucks.

   "These problems must finally be addressed if the administration hopes to 
implement any significant supply chain solutions. Most of what we are seeing is 
not a surprise to our members who have been plagued with dysfunction in the 
supply chain for decades and it's not realistic to expect the supply chain will 
suddenly operate efficiently on a 24/7 schedule when drivers aren't being fully 
paid for their time."

   In recent months, global supply shortages have forced some truckers off the 
road, noted Spencer. "Drivers are experiencing the domino effects of supply and 
staffing shortages that are preventing them from complying with federal 
regulations. Examples include drug and alcohol testing delays and difficulties 
finding replacement electronic logging devices, DEF filters and CPAP machines. 
We encourage the U.S. Department of Transportation and other agencies to begin 
making some emergency allowances to keep safe, qualified drivers in business."

   Spencer said, "But let's be clear, the current supply chain crisis is not 
due to a shortage of truck drivers! Because the real bottlenecks in the supply 
chain occur at pick-up and delivery points, adding more trucks and drivers will 
simply make the lines longer, not faster. Every region of our country and 
segment of our economy relies upon long-haul truck drivers and it's time that 
both the government and the trucking industry begins treating them as essential 
workers. We support the administration's efforts to improve the quality of 
trucking jobs, but this must start with valuing and compensating all of the 
drivers' time."

   "There's a lot of finger pointing, but this isn't an easy situation you can 
blame one party or fix with one solution," said Boshart Trucking. "There is no 
silver bullet. The supply chain is not flexible, and we are seeing that in full 
force. Many are at fault, and many will need to work together to successfully 
work through these challenges."

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow her on Twitter @MaryCKenn




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