Date: Friday, November 12, 2021
President Joe Biden visited the Port of Baltimore on Wednesday to highlight steps his administration is taking to alleviate middle-class burdens and planned infrastructure investments that will increase supply chain efficiency now, and in the future.
The tour took place against a backdrop of consumer inflation at a 30-year high and Christmas products stuck on ships because ports and inland systems are too crowded to move more imports to their destination. Delays and soaring transportation costs were significant contributors to the 6.2% inflation rate in October the government reported earlier.
Congress passed a $1.2 trillion infrastructure bill on Friday that delivers federal investments in transportation, drinking water, electric vehicle charging, broadband and emission-reduction projects.
Biden said his economic priorities are to get prices down, make sure stores are fully stocked and put people back to work who were displaced by COVID.
“By investing in our roads, our bridges, our ports, this bill is going to make it easier for companies to get goods to market quickly … and ensure our shelves are stocked with products. And the longer-term view is it means building greater resilience to withstand the shocks and disruptions we can anticipate,” Biden said in a speech at the Seagirt Marine Terminal.
The bill “represents the biggest investment in ports in American history. And for American families it means products moving faster and less expensively from the factory floor through the supply chain to your home,” he said, with a Maersk container vessel tied up on the dock behind him.
The White House is already moving to implement parts of the infrastructure investment package even before the president signs it into law Monday so funds can be quickly used to address some of the immediate supply chain bottlenecks. On Tuesday, it announced a Port Action Plan that includes:
- Policy changes allowing port authorities to redirect savings from previous projects toward mitigating dock, truck and rail chokepoints.
- An expedited disbursement process for port grants.
- Faster reviews for major harbor-dredging projects.
- Guidance on how states should direct formula grants for roads and bridges to freight projects.
- Establishment of a system for supply chain data sharing to increase visibility.
The infrastructure plan includes $17 billion for ports, $25 billion for airports and $110 billion for roads and bridges, which experts say have suffered from decades of underinvestment.
Included in the package are a $2.25 billion Port Infrastructure Development Grants program and nearly $5 billion for the U.S. Army Corps of Engineers for dedicated port and inland waterway projects. Other programs help fund projects for roads and rail outside port gates.
The legislation also invests $5 billion in the Infrastructure for Rebuilding America grant program, which supports highway and rail projects critical to efficient goods movement and provides $5 billion to the Consolidated Rail Infrastructure and Safety Improvements grant program, which funds projects that improve the safety, efficiency and reliability of intercity passenger and freight rail. The Transportation Department’s Railroad Rehabilitation and Improvement Financing program adds landside port infrastructure as an eligible project category for the first time.
Focus on Port of Baltimore
The Howard Street rail tunnel in Baltimore is an example of the type of nationally significant, public-private project on the drawing board for many years that is finally getting funding to eliminate a major freight bottleneck. The Department of Transportation recently awarded a $125 million discretionary grant to raise the tunnel’s vertical clearance so it can accommodate double-stacked intermodal rail cars, allowing freight railroad CSX (NASDAQ: CSX) direct access to its main north-south line along the Interstate 95 corridor and the ability to more efficiently move shipments to the Ohio Valley and Chicago.
The state of Maryland is the primary funding source for the project, with a $202.5 million investment.
During his tour, the president viewed large machinery, rolls of fresh fiber paperboard and other goods that are imported and exported through Baltimore. He also met crane operators and other unionized dockworkers.
The Port of Baltimore handles more autos and light trucks, heavy farm and construction machinery than any port in the U.S. It is a major gateway for goods purchased for e-commerce sellers, due to the high number of local distribution, fulfillment and sorting centers in the area. The seaport has received 23 unscheduled ships in the past year that were diverted from other ports because of congestion, totaling more than 35,000 twenty-foot equivalent units, according to the Maryland Port Authority.
In 2020, the Seagirt terminal handled 628,132 containers.
Earlier this year, terminal operator Ports America completed a dredging project that deepened to 50 feet a second berth so Seagirt can handle two ultra-large container vessels simultaneously. Seagirt also received four massive, neo-Panamax ship-to-shore cranes that can reach across 23 rows of containers. The cranes are expected to be fully operational early next year. The $166 million terminal expansion also includes 15 hybrid-electric gantry cranes and a new truck gate complex. In February, Ports America relocated a container repair depot away from the dock to provide space for container delivery and pickup.
The MPA and Ports America earlier this year also secured two new container services from Maersk and Mediterranean Shipping Co. The Maersk TP20 service consists of a string of approximately 13 ships, each with a capacity of 2,500 to 4,500 TEUs, traveling through Southeast Asia/Vietnam and China, then through the Panama Canal to Baltimore and Norfolk, Virginia. The MSC Indus 2 is an Indian subcontinent and Mediterranean service consisting of an eight-ship fleet with capacity in the range of 8,500 TEUs. The Indus 2 starts in India and transits the Suez Canal to Italy and Portugal, and on to Norfolk, Baltimore, Miami and Freeport, Bahamas.
Supply chain measures
In recent weeks, the president has adopted a series of recommendations from the White House Supply Chain Disruptions Task Force, formed to coordinate solutions among various freight modes, port authorities, logistics companies and their customers.
The administration has called on the ports of Los Angeles and Long Beach, along with a handful of major importers, to extend hours of operation into the night to maximize utilization of constrained assets and spread out truck transfers to less busy periods. In his speech, Biden said the commitment to 24/7 operations is already paying dividends in reduced wait times for containers. The reality is there is only a single pilot program at one terminal so far, and it has hardly been utilized as yet because of difficulties truckers have returning empty containers and shifting their schedules, according to industry officials in the area. And the number of cargo containers cargo owners agreed to receive at night is extremely small compared to the overall volume.
The White House also endorsed the twin ports’ decision to impose stiff surcharges on imported containers left on the docks for extended periods, created a supply chain dashboard showing key performance indicators, and is cutting red tape to better link Customs systems with trading partners to facilitate document exchanges. Biden met Tuesday with CEOs from big-box retailers and integrated logistics and parcel delivery companies to discuss progress in combating freight bottlenecks, building on a meeting he held a month ago.
Biden explained the basics about how supply chains work to uninitiated Americans facing rising prices on everything from gasoline to bread and clothes, and frustrated that favorite products are sometimes unavailable. He noted how disruptions have coincided with higher demand enabled by higher wages and savings.
“In simple terms, a supply chain is just the journey that a product takes to get to your doorstep. Raw materials, plus labor, assembly and shipping. These products are extremely complex. Even a product as simple as a pencil can use wood from Brazil and graphite from India before it comes together at a factory in the United States,” Biden said. “Global supply chains have dramatically brought down the price of things we buy. But they’ve also made us much more reliant on what happens in other parts of the world. So if the factory in Malaysia shuts down due to a COVID outbreak, it causes a ripple effect that can slow down auto manufacturing in Detroit because they can’t get the computer chips that they need.
“That’s why it’s important to do everything we can to stabilize the supply chains.”