Excerpted from Ag Alert
Feb 23, 2022
By Assemblyman Vince Fong and Rob Lapsley
Much attention has been paid to the congestion at California’s San Pedro Bay ports that is plaguing our national—and global—supply chain. An intricate and intertwined system moves goods and products around the world through the ports, shipped via rail and truck to warehouse facilities, ultimately arriving at stores and homes.
The chokepoints we are seeing throughout the supply chain are being felt by farmers, stores, manufacturers and restaurants in the Central Valley and across California, and will continue into the future.
As of this writing, 90 ships in the ports of Los Angeles and Long Beach are waiting to be unloaded. Before the pandemic, about 17 ships would be anchored at any given time. Together, these two ports account for 40% of all shipping containers entering the United States, moving more than $400 billion of consumer goods each year. And billions of dollars in goods and merchandise are stuck on these ships.
Stores and retailers are struggling to obtain everyday items to stock their shelves. Manufacturers who rely on parts to be delivered on time are being disrupted because of inventory delays. Every item you can imagine moves through this supply chain.
Exports are also affected, and California’s farmers are experiencing the fallout. The state’s production of fruits and vegetables— from almonds to pistachios to apples and every crop in between—are not being exported at their typical rate. In fact, California farmers are seeing an estimated 20% reduction in their export opportunities due to a lack of reliability of ships and bottleneck traffic at our ports.
The disruption in the supply chain caused by the crowded ports is complicated. There are no easy answers, but there are answers. Until more manufacturing of goods can be returned to California, which is necessary, both short- and long-term solutions must be discussed.
There is no doubt that Americans have shifted their purchasing habits. But to say that the crisis was just caused by purchasing habits during COVID fails to address the entirety of the crisis. Simply focusing on one aspect will lead to patchwork solutions, resulting in another crisis.
In the short term, the focus must be on moving goods quickly and efficiently. Empty containers are clogging the ports; they must be moved immediately to open up needed space and free truck chassis.
Hours of operation at distribution centers must align with the ports for smooth movement of goods. Owner-operator truck drivers continue to be in legal limbo as the fate of legal challenges hangs over their heads.
With so many moving parts and entities involved in the supply chain, there must be better collaboration and coordination to ensure all aspects are functioning as smoothly as possible. Obstacles impacting supply-chain operations such as faulty regulations and poor decisions must be prevented.
Creation of a high-level official at the state level to partner with federal-government leadership to be the go-to person for all entities involved would ensure the supply chain’s efficiency. Assembly Bill 1679 would establish a high-level advisor to advocate, expedite and swiftly remove hurdles to ensure efficiency and address chokepoints. This person would be tasked to make sure long-term solutions are implemented. The fact that there is not a supply-chain advisor with expertise has allowed the problems to intensify.
In the long term, sustainable investments must be made in the state’s commerce infrastructure to increase the capability to efficiently move even more merchandise across the country. Without viable investments, the ports will lose businesses to other states, resulting in the loss of well-paying jobs. The state must also dedicate resources so that manufacturing of goods can return to California.
Without these investments and regulatory changes, farmers will suffer losses, and the cost of food will continue to increase .
Disruption to the agricultural industry is more acute than to other sectors. Food has a shelf life. If not shipped timely, it rots and becomes worthless. Overseas customers will view California produce as unreliable, and our farmers will lose access to international markets, resulting in an estimated annual loss of $21 billion.
Like all California businesses, entities in the supply chain including ports, rail, trucking and warehouse operations endure layers and layers of state and local laws that have complicated their operations. An evaluation and examination of these regulations is necessary to determine their impact on the supply crisis.
The current situation is dire. There must be a sense of urgency to tackle this national and global crisis that is rippling across every aspect of the economy. Quick thinking and bold action is necessary to not only reduce supply-chain bottlenecks but to strengthen our economic future.
(Assemblyman Vince Fong, R-Bakersfield, the author of AB 1679, represents California’s 34th Assembly District and may be contacted through his website at ad34.asmrc.org. Rob Lapsley is president of the California Business Roundtable and may be contacted at rlapsley@cbrt.org.)
Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.