CalChamber: Practical Steps to Ease Supply Chain Crisis

In a letter this week to Governor Gavin Newsom and members of the California Legislature, the California Chamber of Commerce offered a series of practical steps the state can take to ease the supply chain crisis and alleviate congestion at California ports.

The recommendations were submitted ahead of a November 3 joint hearing of the Assembly and Senate select committees on ports and goods movement on “The Perfect Storm: California’s Port Congestion and Goods Movement Crisis.”

California’s ports move more than 40% of the goods throughout the United States and handle more containers per ship call than any other port complex in the world. The supply chain constraints the nation is facing touch almost every business in California, driving up costs for business and consumers alike.

Port congestion has caused the ports to increase fees and fines associated with longer-term storage of containers at ports and port facilities, even though companies are scrambling to move these containers as fast as possible.

Most experts agree that even with 24/7 operations, ports will continue to see delays resulting primarily from shifts in supply and demand as manufacturing, shipping, and transport continue to grapple with the COVID-19 pandemic worldwide.

Below is a sampling of the solutions the CalChamber presented to legislators.

Short-Term Solutions

One of the steps the state should take in the short term, the CalChamber stated, is to identify and prioritize medical and health care supplies to keep hospitals and health care facilities fully supplied. The Administration should work with suppliers and California health care systems to identify and prioritize containers that contain medical supplies and to prioritize related routes. California can work directly with health care distributors to identify delayed containers, ships, and ground transport and provide priority for those goods and services.

Other short-term actions include:

• Facilitate maximum port-to-port rail routes: All routes that connect to on-dock and near-dock rail services that serve California’s ports should be evaluated for weight exemptions and other measures to increase efficiencies. This should include all transfer container facilities and intermodal yards that connect California’s ports to the transcontinental rail system that transports cargo across North America.

• Ensure that off-port storage is organized, secure and accurate: California should continue to work with the federal government and the ports to ensure sufficient tracking and tracing and adequate security at off-site locations during this temporary endeavor, along with a strong and accurate communications system. The State should also evaluate upgrades to IT appointment systems which will help streamline pick up and drop off of containers. These measures will also serve to avoid bad actors taking advantage of short-term solutions and to reduce losses.

• Work with ports and terminals to maintain feasible extended gate hours: Increasing predictability of gate hours will provide more time for the trucking community to adjust to extended hours and provide shorter dwell time for drivers. The Administration should work with the ports and marine terminal operators to identify terminal gate hours that can feasibly be kept open for at least the next 90 days, including weekend gate hours.

• Encourage local government land use variances/permit streamlining: Once it has identified surplus properties, the State should evaluate barriers to temporary use. The State should also identify policy and/or financial mechanisms to encourage streamlining of entitlements or permits and remove unnecessary land use restrictions for this temporary use. The Administration could also consider setting timelines for use of each property depending upon proximity to the ports and/or priority routes. This is likely to be a multi-year supply chain crunch, the CalChamber pointed out, which will interfere with the normal business operations and planning for facilities in California and elsewhere. Identifying which properties are targeted for staging and the length of time for each category will be helpful in allowing companies to plan for the medium- and long-term.

Medium- and Long-Term Solutions

Some of the medium- and long-term solutions the CalChamber recommended were:

• Set a timeline for identification and training of additional drivers (medium term): The Administration should set dates for interim milestones for identifying and tracking driver-shortage issues. In addition, California could look at temporarily encouraging/allowing out-of-state trucks to assist at the ports, while continuing to provide incentives for in-state hiring.

• Evaluate supply chain issues in critical sectors (medium term): The Administration should continue to work with stakeholders to evaluate choke points in the supply chain, in addition to issues inherent to port congestion. Costs, interstate travel, and ensuring consistency across transportation sectors may also be a factor in supply chain delays. For example, agricultural goods represent some of the largest share of exports. On-time export of food is integral to keeping costs down in California as well as ensuring California remains a leader in the agricultural sector. In addition, the State should evaluate investments in water-side infrastructure capacity and chokepoints, including evaluating funding support for dredging, navigational infrastructure, and pilotage system overhead, which other ports in the U.S. have implemented in recent years.

• Align electrification timelines with automation upgrades: Recent evaluations rank California’s ports amongst the lowest in the world based on time at berth. Although the California ports are attempting to operate efficiently with the tools they have at hand, significant infrastructure investments will be necessary to continue to achieve efficiencies on par with world leading ports, in addition to east coast and southern ports in the U.S.

• Increase mobility through priority routes: Once identified, California should immediately and aggressively identify and propose projects to address freight bottlenecks within these priority freight routes. Bottlenecks that create inefficiencies result in congestion and delay for both commercial and personal vehicles using the highways in those trade corridors and excess air emissions. The State already identified numerous priority freight routes through its latest update of the California Freight Mobility Plan. The State can build upon this work and that already performed by local metropolitan transportation organizations through their Regional Transportation Plans including identification of priority bottlenecks.

To read the full list of recommendations, visit advocacy.calchamber.com.

Staff Contact: Leah Silverthorn

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Leah B. Silverthorn joined the CalChamber policy team in May 2018 as a policy advocate. She specializes in climate change, air quality, energy, environmental justice, marijuana/cannabis, and transportation and infrastructure issues. She brought to the CalChamber more than a decade of legal experience in environmental, energy, and land use matters. Immediately before coming to CalChamber, she was the principal owner of Silverthorn Legal, based in Seattle, Washington. She focused on environmental litigation, contaminated property redevelopment, and environmental cost recovery and defense. She is an honors graduate of Indiana University-Bloomington, with a B.S. in public affairs and environmental management. She earned her J.D., with honors, at the Indiana University McKinney School of Law, where she was articles editor for the Indiana International and Comparative Law Review and a member of the Moot Court Board.