Ranking Members Larsen, Carbajal Statements from Hearing on Supply Chain Issues
Washington, D.C. — The following are opening remarks, as prepared for delivery, from Ranking Member of the House Committee on Transportation and Infrastructure Rick Larsen (D-WA) and Ranking Member of the Subcommittee on Coast Guard and Maritime Transportation Salud Carbajal (D-CA) during today’s hearing titled, “Maritime Transportation Supply Chain Issues.”
More information on the hearing can be found here.
Ranking Member Larsen:
If the last three years have taught us anything, it’s that a robust and resilient supply chain is essential to our economic and national security.
Last week, this subcommittee heard from the Federal Maritime Commission and the Maritime Administration on the fiscal year 2024 budget request and implementation of the Bipartisan Infrastructure Law (BIL) and Ocean Shipping Reform Act (OSRA).
Today we will hear from industry representatives on how they think implementation of these laws is going and what more we can do to prevent disruption to our supply chain in the future.
There was no better demonstration of the supply chain backlog during the COVID-19 pandemic than at the ports of Los Angeles and Long Beach where nearly 100 vessels were forced to idle offshore.
However, the problem was nationwide and the Puget Sound saw more vessels seeking anchorage than ever before.
As imported goods were in high demand, carriers rushed to return containers, often empty, to Asia so they could be loaded again. Meanwhile, U.S. companies struggled to obtain cargo space at a reasonable price and in a timely manner which meant their exports, often perishable, languished landside. The icing on the cake was when they were given a bill for unfair and unreasonable detention and demurrage fees as a result of a situation over which they had no control.
Thankfully, Congress and President Biden moved quickly to address the supply chain crisis, passing historic legislation like the Bipartisan Infrastructure Law and the Ocean Shipping Reform Act of 2022.
Included in the Bipartisan Infrastructure Law was $6.5 billion exclusively for ports and $27 billion that ports would be eligible for.
The creation of the Supply Chain Disruptions Task Force and Freight Logistics Optimization Works (FLOW) initiative optimized funding for ports to improve supply chain fluidity and increased coordination among every link of the supply chain.
Since the passage of OSRA, the FMC moved quickly to establish a process for accepting, investigating and adjudicating charge complaints, update regulations on penalties and issue a final rule on detention and demurrage.
The need for investments in maritime infrastructure was also made clear by the pandemic. Maritime commerce is a significant contributor to global carbon emissions. Both the Bipartisan Infrastructure Law and the Inflation Reduction Act demonstrate that targeted investments can improve resiliency in the maritime supply chain and reduce emissions.
Investing in low or no emission technology at ports does not mean sacrificing efficiency.
Projects like Middle Harbor Terminal Zero Emission Conversion Project at the Port of Long Beach demonstrate that fact clearly. That project will lower emissions, create a more resilient port and make the movement of cargo more efficient. This project funds the replacement of aging diesel tractors with electric tractors, construction of electric charging infrastructure and installation of software equipment to streamline cargo-handling operations.
Mr. Cordero, I look forward to hearing about other projects underway at the Port of Long Beach.
Despite the congestion we saw at ports in 2021 and 2022, one thing never slowed: our hardworking and dedicated longshore workers. They put in long hours each day to keep containers flowing, despite the constant threat of exposure to COVID-19 and a massive backlog of cargo waiting to be shipped.
Our human infrastructure is critical to the U.S. economy and I want to be clear, federal dollars should not be used to put longshore workers out of a job. The Port Infrastructure Development Program prohibits federal dollars from being used to eliminate jobs and I will work to ensure that prohibition remains.
If we want to prevent the next supply chain crisis, we have to invest in ports. They serve as the gateway for international trade, and without modern infrastructure, our businesses, consumers and communities are at risk.
I look forward to hearing from our witnesses on what they are doing and what the federal government is doing to prevent another supply chain crises.
Thank you, Chair Webster, for scheduling today’s hearing on “Maritime Transportation Supply Chain Issues.” While we touched on aspects of the supply chain and the Ocean Shipping Reform Act in the previous hearing, I look forward to a deeper discussion on this important topic.
The maritime industry is a critical pillar of our economy. In 2020, ocean-going trade accounted for 40% of U.S. international trade value, amounting to 18% of our country’s GDP. In 2020, the top 25 tonnage ports alone handled over 1.7 billion tons of cargo, including vital goods like food, medical supplies and everyday household items.
It is an understatement to say that our economy would not function without a reliable and fair maritime industry.
In fact, the COVID pandemic highlighted the importance our supply chain and the devastating impacts that can occur if we do not invest in our maritime industry and the agencies that regulate them, like the Federal Maritime Commission and the United States Coast Guard.
During the height of COVID, I heard from exporters across dozens of industries about unfair shipping practices and exorbitant costs, which put companies out of business and resulted in higher prices for their customers.
To be clear, the astronomical profits realized by foreign shipping companies contributed to inflation in the United States.
Supply chain gridlock and unfair shipping practices caused the value of California’s food exports to fall by $2.1 billion, or about 17%. That’s just in California.
I was proud to work across the aisle to pass OSRA last Congress. Since its passage, we have already seen a decrease in vessel congestion at ports and significant refunds in undue charges by carriers.
As we heard last week, the FMC has moved quickly on rulemaking and the self-executing policies included in the law. I look forward to hearing from our witnesses today about how our supply chain has become more resilient, fair, and transparent as a result of the passage of this bill.
I’m also eager to hear about how investments in our ports and port infrastructure will continue to support robust international trade and American jobs. As the nexus where cargo moves in and out of our economy, ports have an important role to play in our supply chain.
There is no doubt that our supply chain remains susceptible to major market fluctuations and international events. With the passage of OSRA and the Bipartisan Infrastructure Law though, we have already made significant progress in building a more resilient supply chain.
Thank you to our witnesses for being here today. I am eager to dive into a conversation about how Congress can further support a strong maritime industry and resilient supply chain.
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