Chemical industry costs and delays to ship goods by ocean, truck, and rail have all increased since last year, according to survey results the American Chemistry Council released Wednesday.
The council, which represents chemical manufacturers, surveyed members during the first quarter of this year to update information obtained last year.
Supply chain and transportation disruptions are costing millions of dollars; harming chemical producers, particularly in the South; and creating force majeure situations in which disruptions cause contract violations, said Martha Moore, chief economist with the council.
Of the 64 companies that responded:
- 55% said total costs, transit times, and other problems related to ocean shipping and ports were worse this year, compared to 37% last year;
- 54% said trucking costs, delays, labor shortages, and other problems were worse this year, compared to 42% last year;
- 39% said rail shipping costs, delays, and other problems were worse this year, compared to 22% last year; and
- 21% said costs, delays, and labor shortages for inland waterway shipments were worse this year, compared to 10% in 2021.
The chemistry council will release further updated survey results next week, she said.
Federal Policies, Legislation
The White House’s initiative to create an apprenticeship program to train 18- to 20-year-olds to operate trucks in interstate commerce supervised by experienced drivers, will help, Moore said at the council’s Global Chemical Regulations Conference.
The Department of Transportation is implementing the pilot program, which was part of the Infrastructure Investment and Jobs Act.
Other policies that would help chemical manufacturers include passage of the Ocean Shipping Reform Act, Moore said. The Senate approved a version of the bill, S. 3580, on March 31, and the House approved its version, H.R. 4996, Dec. 8. The legislation is headed to conference to reconcile differences.
The Federal Maritime Commission would have to investigate complaints about detention and storage charges under the Senate bill, while the House bill directs the commission to issue regulations prohibiting unjust fees.
Increasing the gross weight capacity for trucks also would help, as would a variety of updates to rail service and policies, Moore said.
Rail service changes the chemistry council supports include increased competition and limits on the demurrage, or storage, and other extra fees rail companies charge, Chris Jahn, president and CEO of the chemistry council, said in a previous interview.
National Security
Addressing supply chain problems and improving the nation’s infrastructure “is a matter not just of economic security but national security,” Sameera Fazili, deputy director of the White House National Economic Council, told conference participants.
The battery industry, for example, depends on China for 60% of the lithium and 80% of the cobalt that country refines, she said. Spreading out sources of materials and U.S. and European efforts to increase trade in low-carbon “green steel and aluminum” are part of government’s response to these problems, said Fazili, who leads the Supply Chain Disruptions Task Force.
There are 50% fewer containers sitting on Los Angeles’ and Long Beach’s ports since Nov. 1, 2021, after local authorities, labor unions, and others tackled problems there, she said. A key reason is the ports threatened—but never pursued—higher fees for containers on the docks, “perhaps the most effective fee that has never been charged in history,” she said.
At the end of February, retail inventories excluding autos were six percent higher than before the pandemic, she said. The Trucking Action Plan‘s streamlined licenses for truckers and other efforts are helping more inventories to move, but a lot of work remains, Fazili said.
