Advisory Committee on Supply Chain Competitiveness: June 2021 Meeting Transcript

Advisory Committee on Supply Chain Competitiveness (ACSCC)

Via Webex

Thursday, June 24, 2021

8:47 am CT

Moderator: Richard Boll

MEETING TRANSCRIPT

Coordinator:    Welcome and thank you for standing by. All participants will be in a listen-only mode until the question-and-answer portions of the presentation. During those times, if you would like to ask a question, please press star 1, and record your name when prompted. As a reminder, this call is being recorded. If you have any objections, you may disconnect at this time. Now I would like to turn the call over to your host, Rick Gabrielson. You may begin. Thank you.

Rick Gabrielson:    Thanks, Jeff. Good morning, everybody. Thank you for taking time out of your busy schedules to be with us today. We have a very full agenda, so I’ll keep my remarks very brief.

    Before I pass it onto Rich, one comment I would make is that recommendations from our last session that we had are now posted on the Commerce web site. So, I encourage everyone to take a look at that. And I’ll turn it over to Rich. Rich.

Richard Boll:    Good morning, everyone. And as it was already announced, this meeting is being recorded.

    And also when we do get to the question and answer or the speaking parts, please identify yourself and your organization so that can be recorded or put up for the call so we can have that for future references. So, if you could do that, that would be great. And with that, I bring it back to Rick.

Rick Gabrielson:    Great. Thanks much, Rich. I’ll turn it over to Heather, right, who will give us some welcome remarks and then we’ll introduce Monica. Go ahead, Heather.

Heather Sykes:    Hi. Thanks, Rick. Good morning. I’m excited to join you all today again for a ACSCC Meeting that will focus on the very important supply chain and economic development that has taken place over the past two months. We greatly value the ACSCC’s input and recommendations which help us to support U.S. export growth and national economic competitiveness, encourage innovation, and facilitate the movement of goods.

    Today we’ll have two speakers, Deputy Assistant Secretary Monica Gorman and Nellie Abernathy, the Deputy Director for the Office of Policy and Strategic Planning, that will address supply chain competitiveness issues related to the February 24th Supply Chain Executive Order. And we’ll ask for your recommendations and guidance going forward.

    We will hear from the National Association of Wholesaler-Distributors and the Soy Transportation Coalition regarding supply chain issues in the Chemicals and Agriculture sectors. We will also hear from various U.S. government agencies on a variety of supply chain-related issues.

    In addition, the ACSCC plans to consider recommendations concerning freight infrastructure and investments under the American Jobs Plan and the importance of public/private partnership and infrastructure investments.

    But first, I would like to just briefly introduce the Deputy Assistant Secretary for Manufacturing, Dr. Monica J. Gorman. Dr. Gorman directs the Department of Commerce’s efforts to advance the global competitiveness of manufacturing industries through the development and execution of international trade and investment policies and promotion strategies.

    Dr. Gorman has utilized her industry experience to oversee ITA’s input into the White House issuance of the 100-day report on semiconductors and works with the National Security Council on the interagencies to provide input on other projects relating to securing supply chains. Prior to her appointment, Dr. Gorman worked for nearly two decades in the private sector as Vice President of Responsible Leadership and Global Compliance at New Balance Athletics, Inc., and in executive roles at American Eagle Outfitters and Gap, Inc.

    She served as an industry representative on the Industry Trade Advisory Committee on Textiles and Clothing for more than a decade. Dr. Gorman earned her B.A. from Dartmouth College and her MPhil and Ph.D. from the University of Oxford where she was a Rotary Scholar. DAS Gorman.

Monica Gorman:    Great. Thanks so much, Heather. Can you hear me?

Heather Sykes:    Yes.

Monica Gorman:    Great. All right. Well, thank you, everybody. And it’s really a pleasure to be here with you this morning.

    And I first want to start by just saying thank you for your service on this Advisory Committee. As Heather mentioned, I served for more than a decade on one of the industry Trade Advisory Committees. So, I do know what kind of time it takes for you to do this service. But I just want to stress that it’s so important for us here at Commerce to hear your input, to just hear what is on the minds of those of you in the private sector. It’s not that long ago that I was sitting where you are.

    And so, again, I just want to say thank you for the time that you take to be with us. Just also another comment, I mean, I’ve been in this position since March 1st. But I do come from two decades in the private sector. And so, I’m hoping that that is something that I can bring to this role as somebody who has, again, been where you are not that long ago.

    So, I want to talk mostly about the supply chain work that we are undertaking within the Administration. And hopefully we can save some time for questions at the end. As many of you know, the President issued an Executive Order in February, which mandated four reports within 100 days on critical supply chains.

    And that order emphasized that the United States needs resilient, diverse, and secure supply chains in order to ensure our economic prosperity as well as our national security.

    And I think it’s fair to say that COVID, perhaps more so than any other event in recent memory, has highlighted just how important it is that we have resilient, diverse, and secure supply chains. It’s probably also fair to say that the American public is now recognizing just how important resilient supply chains are.

    But one of my favorite examples comes from a local company here. It’s a local window company. And I tend to see their advertisement if I’m watching the local news. And the company’s tagline is no supply chain delays.

    And in any case, I think if it’s a marketing tagline that there are no supply chain delays, it certainly shows that these issues have entered the consciousness of mainstream America.

    As most of you almost certainly know, the initial four 100-day reports were released on June 8th. And they contain recommendations to address the risks associated with key segments of key supply chains. And those are for semiconductors, critical minerals and strategic materials, high capacity batteries, and pharmaceuticals

    So, the reports, as well as a related announcement on the White House web site, I’m sure they’re of interest to many of you. And so, I would strongly recommend, if you can spare the time, to please take a read through at least to the Executive Summary to get a very clear and deep sense of how we and the Administration are thinking about supply chain policy.

    So, I’m going to talk a little bit about Commerce’s role in the Supply Chain Executive Order. We here, at Commerce, led the 100-day report on semiconductors. Commerce is also going to co-lead a one-year report also mandated by that Executive Order on the Information and Communications Technology sector, the ICT sector. We’ll be co-leading that with the Department of Homeland Security.

    All that said, I do want to stress that subject matter experts here actually within my unit here in Commerce in Industry and Analysis contributed heavily to the three other 100-day reports on battery, pharmaceuticals, and minerals. And we will also be contributing heavily to some of the other one-year reports giving our industry expertise.

    And it really just shows the depth and breadth of the expertise that our industry analysts bring to the table, as well as through their engagement with you and the views that you bring to the table. We are also, in turn, being able to share that with other agencies.

    Now, let me turn briefly to some of the reports and their specific recommendations. At the top line, we know that resilient supply chains are ones that recover quickly from unexpected events. That is the goal that we’re striving for.

    So, across the reports you’ll notice a number of key cross-cutting themes. First, the need to invest in and strengthen our domestic manufacturing base right here in America.

    Second, continuing and strengthening our American leadership in innovation, as well as in research and development. We really do lead this in so many sectors. That’s something we not only want to continue, but we want to strengthen.

    Third, the importance of workers and in particular American workers who are drivers of resiliency. They are the ones at the forefront on the factory floors solving problems. They need to be seen as assets who should be invested in, not cost-efficiently controlled.

    Four, ensuring that economic opportunity is available for all people and in all parts of this country.

    And fifth, the importance of building a healthy and diverse ecosystem of suppliers. In the United States, we know that the backbone of this ecosystem is our small and our medium-sized enterprises.

    But that said, we also know that not everything has and will be made here. And so, we also need to look to geographic diversity, particularly with our allies and like-minded partner countries.

    So, I’ll take a slightly deeper dive into semiconductors, because that is where we spent a lot of our time here at Commerce in the last few months. Semiconductors, just by way of background, they’re an essential component of everyday life. And they’re certainly an essential component of our electronic devices. They’re ubiquitous. They enable our telecommunications. They enable our grid infrastructure. They run our critical businesses and government systems. And they’re in so many products, everything from fighter jets to our refrigerators. I mean we don’t function without these things.

    And a car, for example, you may not think of semiconductors in cars, certainly not top line. But it can require more than 100 semiconductors, everything from touchscreens to controlling the engine to driver assistance cameras. All of these things are powered by semiconductors.

    Unfortunately, the U.S. share of global semiconductor production has dropped from 37% in 1990 to 12% today. And it is projected to decline further without a strategic and comprehensive U.S. intervention to support the industry.

    So, our report examines the semiconductor supply chain through five essential segments. We looked at design, fabrication, assembly tests and packaging, as well as advanced packaging, which is emerging, materials, and manufacturing equipment.

    And through this examination, we actually identified eight different cross-cutting risks that encompass most of the identified threats to the semiconductor supply chain. The first is fragility to that supply chain. Second, malicious disruptions. Third, the use of obsolete or generations-old equipment and semiconductors and the challenges for the continued profitability of some of the companies in that supply chain. Fourth, customer concentration as well as geopolitical concerns. Fifth, electronics production network effects. Six, the gaps in our human capital. Seven, IP theft. And eight, challenges that we have aligning public and private interests.

    So, semiconductor experts right here in Commerce’s Industry and Analysis Unit authored many sections of this 100-day report. One of the most important recommendations that we made is that we need dedicated funding for semiconductor manufacturing and research and development here in the United States in the longer term.

    So, we strongly recommend that Congress support at least $50 billion in investments to advance domestic manufacturing of leading-edge semiconductors, as well as to expand capacity in the (share node) and memory production to support critical manufacturing, industrial, and defense applications.

    We also need that funding to promote R&D to ensure that the next generation of semiconductors are developed and produced right here in the United States.

    As we look to the report recommendations, we are also going to be focused on partnering with industry and with our allies and partner countries. And we’re going to be looking to attract and support high-impact foreign investment here in the U.S., as well as working to ensure that our American companies can enjoy a level playing field when they invest overseas.

    So, in addition to semiconductors, our industry experts here at Commerce, that we provided critical support for Pharmaceuticals, High Capacity Batteries, and Critical Minerals Reports that were led by other agencies. I’m not going to go into detail into each of these reports. I don’t think we have that much time.

    But I would strongly encourage you to read them or at least the Executive Summaries. And they are now available on the White House website.

    And I do want to say that these reports and all of the effort that has gone into them will heavily complement our efforts for the six one-year assessments that are now underway.

    So, let me just say a few words now about the one-year report that we’re also mandated by the February Executive Order. As I think many of you know, Commerce is working with DHS on the one-year report on the sector, on the critical sector of the ICT industrial base, Information and Communications Technology base. Now, this is obviously a very broad subject area. So one of the first things that we’re doing is really trying to scope this report and ensure that we’re focusing on the most critical elements.

    That said, we are also going to be supporting here at Commerce four of the other one-year reports led by other agencies that will be targeting public health, the energy sector, agricultural, commodities, and transportation.

    So, I’ll just say a couple of words here on transportation. I know you heard from DOT at your April meeting about their lead role in coordinating and drafting the one-year report. And in April, I did lead a meeting between our teams here at Commerce responsible for transportation, goods and services, and our colleagues over at DOT.

    And we’ve been talking about ways to collaborate on the Transportation Supply Chain Report. And so far we’ve identified two key elements. First, the manufacturing supply chains for transportation-related products. And second, the role of transportation itself and supply chains, which I know many of you are so familiar with.

    And so, while transportation can provide most of the details on this, we will hear at Commerce particularly work to support the manufacturing side of the supply chain for transportation-related products.

    I also do want to stress that Commerce has repeatedly noted throughout our interagency discussions that supply chain logistics and transportation needs have to be included as a cost-cutting theme throughout all of these reports, because we know that all of this work is for naught if material can’t actually get to manufacturers and finished goods can’t actually be delivered to the consumer.

    So, again, I know that’s the key area of focus for this committee. We welcome your thoughts and input and it is certainly going to inform our work going forward as we pull together these reports.

    So, I’d like to close also by noting that one of the most important elements of this entire process is our engagement with you and with other stakeholders. Truly, one of the most valuable ways that you and industry can help us better understand supply chain concerns is by raising your voice, whether it’s through written comments or providing your oral views through a variety of different channels, such as this committee or more formally.

    And we are going to be embarking on a stakeholder engagement process very soon for the one-year report. I encourage you to keep an eye out in the Federal Register for notices of inquiry. They will be published fairly soon.

    With our Semiconductor Report, we received over 100 written comments in response to our request for information. And we also had many companies, associations, and organizations provide testimony at an oral hearing as well.

    So, again, I just want to stress that industry input was absolutely essential to understanding some of the key complexities of the semiconductor supply chain. We know that will also be true for the ICT sector.

    So, again, really encourage you. Keep an eye out in the Federal Register. Look for that NOI. And we would absolutely welcome your views.

    We know, too, that it can be somewhat of an arcane process by our teams. Here in Industry Analysis, we’ll be glad to work with Rich to make sure that you are made aware when that NOI comes out and have an opportunity to participate.

    So, with that, I’m going to close here. I just want to say thank you again for your time and the opportunity to speak with you and again, to stress the insights and advice you provide to us here at Commerce are absolutely essential. So, thank you for your service. Thank you for your time. And if time permits, I think we’ve got a little bit. I’m happy to take a few questions.

Rick Gabrielson:    Great. Thanks so much, Monica. We do have some time for questions. So as Jeff mentioned from the beginning, if you can press star 1 so you get into the queue to be able to ask some questions of Monica.

    Jeff, do we have anybody who’s asking questions so far?

Coordinator:    I’m showing no further questions at this time.

Rick Gabrielson:    Maybe one that I would tee up, Monica, is, you know, as you try to - and I’ll focus maybe just on the semiconductor piece. As you try to bring more of that manufacturing back into the U.S., and I suspect the report may have this in it. But what emphasis is being placed on training workers, you know, who may have lost some of that expertise over the years? And what kind of efforts are they considering or talking about in terms of trying to get people, you know, trained and ready to be able to support that effort?

Monica Gorman:    Yes. That’s a terrific question. And actually workforce training and workforce needs are a cross-cutting theme throughout all of the reports, so you’ll see that come up. It’s one that we’re continuing to look at from a more comprehensive perspective. But we know that there’s a need to invest more heavily in STEM education. There’s a need to build the pipelines at all levels, everything from trades - through trade, community college level, all the way up to Ph.D.’s. And we need to strengthen the pipelines between the educational institutions and industry.

    So, how exactly that comes to life is still being developed, but it’s absolutely been identified as a need and will continue to be flushed out as we go forward, very important.

Rick Gabrielson:    Yes, absolutely. Any other questions from the group?

Coordinator:    Yes. We got a question from…

Rick Gabrielson:    Maybe Monica.

Coordinator:    …Juan Villa.

Rick Gabrielson:    Go ahead.

Coordinator:    Yes. We got a question from Juan Villa. Your line is open.

Juan Villa:    Hi. Thank you very much, doctor. The question is, is there a plan to expand the analysis to other supply chains? You know, this is probably the first group, the most important one for the moment. But is there a plan to expand to other ones, you know, like food or agricultural or other commodities? Thank you.

Monica Gorman:    So, food and agriculture are included in the one-year reports that are mandated by the EO from February. So that sector is being looked at.

    And I would stress that these one-year assessments that are occurring right now are extremely broad. So public health, energy, transportation, food, they’re going to capture a lot of different sectors.

    That said, we know that there are some pretty acute issues at the moment. And so when these reports were launched, the White House also announced that there’s a short-term task force that is looking at some key areas, such as lumber, where there’s been a real supply demand mismatch, because we know that there’s some urgent efforts that are also required.

    So, a lot will be captured, I think, with the work that’s already underway because the mandate is so broad. But certainly, there is a recognition that there are other issues arising in real-time. And the task force is one example of how, when those are identified, efforts will be set up to address them.

Juan Villa:    Thank you.

Coordinator:    We have a question from Tom Madrecki.

Rick Gabrielson:    Another question, Jeff.

Coordinator:    You have a question from Tom Madrecki. Your line is open.

Tom Madrecki:    Thanks. Great. Thank you so much and thank you, Monica, and everyone in the Administration, just for your efforts thus far on supply chain. It’s very much appreciated by the consumer-packaged goods industry, certainly, as that industry has responded to pandemic and then sort of ensuing consumer demand stemming from that.

    A very quick question. As you continue to conduct your analysis in the year-long reviews and put forward recommendations in the supply chain space, I know that one of the recommendations in the 100-day report was the standing up of a Supply Chain Disruption Task Force.

    And I was wondering if you could add a bit more detail as to the composition of that task force and how you see that coming together in the coming weeks or months.

Monica Gorman:    Sure. Yes. So, the task force was announced, and it will be led by the Secretaries of Commerce, Transportation, and Agriculture. And it is quite targeted at the moment to sectors where we know that there is a somewhat urgent mismatch between supply and demand so homebuilding and construction, semiconductors, transportation, agriculture and food.

    And so, the thinking behind this is that it will bring the full weight and force, the full capacity of the federal government to address these near-term issues. It will seek to convene stakeholders to diagnose the problem. And then figure out what solutions are out there, whether they are big or small, whether they are public or private or some combination thereof, to try to alleviate those bottlenecks and those supply constraints.

    So, it is quite focused at the moment in the sectors that have been identified and looking to really address that urgent need.

    But certainly, we’ll be keeping track of other areas out there and seeing what else is necessary. But really, really targeted right now to identified areas of need that have urgency and need an urgent answer.

Tom Madrecki:    Great. Thank you so much.

Rick Gabrielson:    Okay. We have time for one last question. But as a reminder to everybody, if you’re asking a question, please state your name and the organization that you’re with. That will help the speaker know who’s asking the question. Any other questions?

Eugene Alford:    Hey Rick. This is Eugene. We have a question in the Q&A chat for DAS Gorman.

Rick Gabrielson:    Okay. I don’t see it in mine, Eugene. Maybe you could read it.

((Crosstalk))

Eugene Alford:    All right. I’ll read it. You mentioned the upcoming notices of inquiry in the Federal Register. What will the specific topics available for public comment? So, I think be available, I think is what is intended here.

Monica Gorman:    So, they are related to the one-year assessment reviews that are going on right now on the six different industrial bases. So, the one that Commerce will issue will be on the ICT sector, Information and Communications Technology specifically. And looking for any and all stakeholder input into that sector and specifically the critical sectors and subsectors that we need to be aware of, supply chain concerns, risks, et cetera.

    The other agencies are also, my understanding, is working on similar NOIs. It may look slightly different depending on which agency has the lead on which sector. But you can certainly anticipate a request for stakeholder input on all of the different industrial bases. So, energy, public health, transportation, ICT, et cetera, all as outlined by the EO.

    And again, would strongly encourage folks to - if you have connections to these sectors and I suspect you do, given how broad they are, just please, please raise your voice, provide written comments, provide oral testimony. We really appreciate your input and perspective.

Rick Gabrielson:    Great, thanks. Monica, on behalf of the group, I’d really like to thank you for your time this morning. Very informative, a great topic and very timely.

Monica Gorman:    Great. Well, thanks so much. Great to be here.

Rick Gabrielson:    Thanks, Monica. Okay, at this point, we want to spend a little bit of time talking about our meeting goals as the ACSC, see our schedule coming up for 2020, some of the deadlines that Rich will cover with you. And then I’ll wrap up a piece at the end. So Rich, I’m going to turn it over to you.

Richard Boll:    Thank you very much, Rick. Looking at the schedule for next year and we’re going to try to keep the schedule pretty much the same as we have for the last seven, eight, nine years, give or take. We basically have our meetings January, April, June, and October.

    And of course, we have to take into account COVID and how much everything is going to be open by January. Hopefully, we’ll be able to have our face-to-face meetings at our beautiful Library at Commerce. That’s what we hope for.

    But what we have right now I’m going to give you the dates and there’s going to be two dates. It will be Wednesday and Thursday of each of those weeks. And that’s what we’ve done before COVID. And that COVID makes it just to have a one-day meeting or a virtual meeting, we’ll just have it on the second day.

    But right now, we’re looking at January 19th and 20th, April 20th, 21st, June 22nd, 23rd, and October 19, 20. So those are the dates that we’re looking at. Basically, the third week of each of the months. And that’s what we had done in the past.

    We will look at and see if there’s any major conflicts with those dates. You know, not everyone’s going to be able to make every one. But if there’s a big conflict, maybe we can move it. But as of right now, put those in your calendars in pencil and maybe even pen. So, we’re going to be looking at those dates to carry on for 2022, which is hard to say.

    But in addition, we have a couple deadlines that are that are coming up. And one of the most important ones, of course, is the re-chartering. It’s a process that we do every year, every two years. So ever since 2011, we’ve done it every two years. So, we’re at that point. And we have to have that done by November. I think it’s 19th. So, there’ll be a lot of work going into re-chartering it. Hopefully, the process will be fast, or at least not as slow as it has in the past. Hopefully we can work that out.

    But I don’t see really any problems. There might be some differences that might happen, you know, moving forward. But nothing that I see that’s going to be specific. In addition, when it comes to re-chartering after that process, we have the process of getting new members. I’ll kind of go over that a little bit.

    We’re going to go - we have about 5 or 6 spots now and available because we have 45 members. We have about 40 right now. We’ve lost some of those people mostly for retirement or moving to other jobs. So, we’re looking at the 40 that we have now. We’re going to look at all the members to see how much they’ve been participating. We’d like to see, you know, 50% participation in meetings and Subcommittee Meetings. We’re going to look at that.

    We’re also going to send out to all the members to see their interest in continuing with the committee. And we hope that you all come back. But, maybe there’s other issues and stuff like that. And you can’t continue on. That’s fine.

    But with all that work being done, we’re not really sure how many openings we’re going to have. But with that said, you know, we’re looking for, you know, maybe some different industries that are not representative on the committee, and diversity on the committee as well.

    So, if you have anybody in mind or if you want to talk to some people about the committee and you could send me their information because we will be sending out a Federal Register Notice probably in January or February, depending on our timing.

    And I’d like to be able to send that to the people that you think might be good members going forward. So, if you give me their name and contact information, I can do that. I’ve already started keeping a list already, I have a couple names already that people have suggested.

    So, if you can just, send them forward to me. We generally each time, you know, we have probably anywhere between five and ten or so openings. We usually get, 30, 35 applications. So, we’ve always been - we’ve always had the interest in our Committee, and I hope that continues going forward.

    But we’d definitely like to be able to get some members and some new members that might, like, manufacturing is one of the things that we’re kind of light on right now. We used to have several manufacturers. But now we don’t have that as a major part of our committee. And it would be nice to get some of those back. So, if you got any ideas on that, that would be great.

    Let me see. Also, we got a letter from a - from the Electronics transition - Transactions Association, which I sent out to all the members to look at. These are - when we get these types of public letters, we look at those. And we kind of - as we do our recommendations and as we talk forward with issues that are occurring, and you know, our recommendations are pretty current on what’s going on in today’s environment. You know, keep the comments from these letters in mind when you’re looking at your recommendations just to get some extra feedback or some input into the work that we’re doing and just keep that in mind. Because I know everyone is - hopefully, everyone is able to see it.

    And that’s pretty much all I have. Rick, do you want to include anything else from that?

Rick Gabrielson:    Yes. A couple of things quick. Like somebody may ask it, Rich. And I know we haven’t talked about this, so I apologize for just dropping this on you last minute.

    But with our schedule for next year and hopefully, we’re meeting in person, any thoughts or discussion on either resurrecting the Chicago trip or designating one of those sessions for a off-site meeting.

Richard Boll:    Yes. I forgot. I should’ve probably brought that up. There is talk of having Chicago. We’ve had some work on it. But then COVID kind of, you know, ripped that out of our hands. I think we’re talking about probably the April meeting.

    You know, because our next meeting in October, you know, that’s another one. It’s not really sure what we’re going to have so.

Rick Gabrielson:    Right.

Richard Boll:    You know, keep our fingers crossed. Maybe January will be the one that we can actually have our face-to-face. So, maybe we’re thinking since January is kind of cold in Chicago, maybe we’ll do it in April. So, I think April might be the one that we do.

    And for people that are not members, we generally do a regional trip somewhere in the United States. And looking basically at the different regions of the country and what supply chain issues they have. And we get to see  some of the, I guess you want to call it, supply chain facilities in different regions and also to find out, what is going on in these regions that are maybe different than elsewhere in the country. So, we’ve got - so we’re looking at Chicago as our next trip.

    So, I’ll leave it at that. Anything else, sir?

Rick Gabrielson:    Great. Thank you. Yes. Just maybe following up on the letter that we did receive, you know, from the Electronic Transactions Association or ETA, very timely to Monica’s conversation and presentation for us this morning.

    And as Rich mentioned, that went out with your agenda.

    Did any - do any of our members have any questions about that letter at this point in time?

    Let that go for a minute and see if anybody’s got a question on it. If not, to Rich’s point, we certainly will keep those things in mind. But there are subcommittees as we take a look at actions.

    Having said that…

Richard Boll:    And…

Rick Gabrielson:    …we can move onto the - go-ahead, Rich.

Richard Boll:    Yes. I’m kind of, yes, and also I’m looking to see if the people that actually sent the letter are on the call. I do not see them because we could have probably given them a couple minutes to discuss their letter. But I do not see them on here. So, yes, I think we’ll just move on then.

Rick Gabrielson:    Okay. Great. With that. Is Nellie with us? Is she on the line, Jeff?

Coordinator:    I’m showing Nellie is not on here. I do not see her on the call.

Rick Gabrielson:    Okay, we have a couple minutes really.

((Crosstalk))

Coordinator:    We have (unintelligible). Nellie, if you’re on the line if you could hit star 0 on your phone.

Richard Boll:    Eugene, are you there? Can you send her a quick note?

    Also, I want to mention also that, you know, our other co-chair Rick Blasgen, he couldn’t make it at this meeting. So, and he sends his condolence. He couldn’t make it for this meeting. But, he’ll be back on this for the next meetings, I assume so.

Rick Gabrielson:    Yes.

Richard Boll:    I just to let you know that not he’s in, or he’s not going to be on today’s call.

Rick Gabrielson:    Had a prior commitment, yes.

Richard Boll:    Let’s see now. I guess Nellie was on the call last time, so hopefully she’s knowledgeable of how to get back on. I did send her something this morning.

Rick Gabrielson:    Yes. So, somebody sent her a text or a message.

Eugene Alford:    Hey Rick, Rich, this is Eugene Alford. I have sent an email to Nellie. So, hopefully she’ll be joining us shortly.

    We have a question from Margaret Spiegelman. I believe it’s related to the ETA letter. Is that letter available publicly?

    And the answer is that letter is actually submitted into the Commerce Docket related to the Semiconductor Report. So, it would be one of those hundred documents that or so documents that Monica Gorman mentioned earlier.

Rick Gabrielson:    Monica referenced.

Eugene Alford:    That is a public docket.

Rick Gabrielson:    Okay.

Eugene Alford:    So.

Rick Gabrielson:    Thank you, Eugene.

Eugene Alford:    You’re welcome.

Richard Boll:    And we’ll also have that on our web site after the meeting.

Rick Gabrielson:    Any other questions that might be out there while we’re waiting for Nellie?

Richard Boll:    I just got kicked off.

Rick Gabrielson:    Got kicked off.

Richard Boll:    Yes. I’ll have to get into the Internet version. I’ll be right back.

Rick Gabrielson:    Okay. Thank you. Other questions by any of the members or public while we’re waiting for Nellie?

    Melzie, I see your question. Not sure I can answer it for you, but I can read it, you know, for the group. Melzie’s question is it was her understanding that the EPA was the main reason we are not able to manufacture them in the U.S. today. Has something changed?

    Melzie, I don’t have the answer to that. You know, Monica would be probably the - one of the best people to answer that. And maybe what we can do is go through and have that as a follow-up question for her, that she could respond back to you directly.

    So, we can take that as a follow up. When Richard’s able to get back on, we can find a way to get that to her. Okay.

Eugene Alford:    So, Rick, it’s Eugene again. I want to confirm. We do have Birat Pandey with the Department of Transportation. He is online. So, our next speaker.

Rick Gabrielson:    Oh. Why don’t we…

((Crosstalk))

Eugene Alford:    (Unintelligible) after Nellie speaks.

Rick Gabrielson:    Yes. If we - do you want to move to him right now Eugene?

Eugene Alford:    Well, let’s ask Rich. But I just want to make you aware.

Rick Gabrielson:    Rich, got kicked off.

Richard Boll:    Yes.

Rick Gabrielson:    He’s trying to get back in again.

Richard Boll:    Have you heard - I’m back in. I’m all good. Have you heard back from Nellie at all? I have not.

Rick Gabrielson:    Do you want to move onto Birat?

Richard Boll:    Sure. I think that would be fine.

Rick Gabrielson:    Let’s do that. And maybe in the meantime, you can get a note to Nellie to try to get on and then standby. But in the interest of everyone’s time, we’ll move on.

    Birat Pandey is sitting in for Caitlin Hughes, who had a conflict and could not make it. And is going to talk to us a little bit about the Freight Analysis Framework. Birat.

Birat Pandey:    Thank you. Can you hear me?

Rick Gabrielson:    Yes, we can.

Birat Pandey:    And can you pull up my slides, please? Thank you.

    And will I have control of the slides or you’re going to move slides for me?

Eugene Alford:    I’ll move them for you. Nellie has just gotten in, by the way.

Richard Boll:    Yes. Can…

Birat Pandey:    Do you want me to hold back?

Richard Boll:    Go back to Nellie. Yes. I think so. I think Nellie is on the line. Nellie. I thought she was. Jeff, do you see Nellie on the line at all? I don’t see her name anymore though.

Rick Gabrielson:    Did you say Nellie was on?

Nellie Abernathy:    I am on. I’m so sorry. But it…

Richard Boll:    Oh, there we go.

Nellie Abernathy:    Had some technical challenges.

Richard Boll:    Okay.

Rick Gabrielson:    Welcome Nellie. Eugene, can you take down the - Birat’s presentation and turn it over to Nellie’s? There we go.

Richard Boll:    Okay, I think we’re all set for Nellie.

Rick Gabrielson:    Great. Go ahead, Nellie.

Nellie Abernathy:    Thank you so much. And I’m so sorry for my late arrival. I was honored to speak to this group about a month or so ago when we were midstream with the 100-day supply chain review process. And I’m happy to return today to provide an update on the work.

    And I believe Monica Gorman from the Department of Commerce spoke to this group maybe 20 minutes ago about the Department of Commerce contributions and fund effort. I am going to speak to the effort overall. In my role as a (unintelligible) Commerce NSC, I was part of the team at the White House responsible for executing EO 14-017 where the President directed a whole of government approach to assessing the vulnerabilities in and strengthening the resilience of critical supply chains.

    And so, just as a refresher, in the first 100 days of that EO, we were asked to review supply chains for critical minerals, semiconductors and advanced packaging, pharmaceuticals, and active pharmaceutical ingredients, and high capacity batteries.

    On June 8, we released 250 pages plus of reports assessing supply chain vulnerabilities and making recommendations to address them.

    And I’m not - don’t worry, I won’t cover all 250 pages. But I wanted to provide some top lines here. And then leave time for questions. There are three broad buckets of the work that I’m hoping to discuss.

    So first, in producing these reports, we identified a set of common themes around our vulnerabilities and also common assets and opportunities to build resilience. So, I want to talk a little bit about those cross-cutting themes.

    Second, we did produce very specific, sector-specific, and cross-cutting recommendations. And the President from the beginning was clear that we weren’t writing these reports so they could sit on a shelf. We needed to be driving towards immediate action.

    And so, we did make a set of immediate announcements about recognitions we (unintelligible) exports. We launched a Supply Chain Disruptions Task Force to address some of the immediate discontinuities that we see right now creating potentially headwinds for our recovery. So I’ll talk briefly about that.

    Starting with the common themes and specifically with the vulnerabilities. The supply chains across the four products were very different. Of course, the EV battery supply chain is different, for example, then the supply chain for drugs. So, this is not comprehensive of all the challenges we found or vulnerabilities and risks.

    But what was clear was that we did - we do have hollowed out domestic production and innovation capacity in all of these fields. We also see misaligned market incentives that promote short-termism and disincentivize investments and resilience in private markets. We also see that industrial policies adopted by our allies and our partners and, of course, competitor nations have had a real impact in each of these supply chains.

    And that geographic concentration, whether it’s geographic concentration of domestic production or geographic concentration globally presents a real risk to disruption.

    And finally, we noted an underinvestment on our part in international cooperation around these issues.

    So, those are some top lines that really made clear to us that we need a new approach to policymaking and production. And we need to reverse the trends of prioritizing low cost over the security, sustainability, and resilience of our supply chain.

    So, we similarly see a couple of - a handful of overarching goals that correspond to some of those challenges. The need for transformational investments in production and innovation and from the public sector in close coordination with the private sector, of course.

    We’ve also - there’s clearly a need for the use of standards and incentives and high-risk rules of the road that can help shape markets to get support and reward an ability (unintelligible).

    A third point is that we can better use like many of our allies and partners and competitors, frankly, the (unintelligible) as we’ve been outlining in the President’s Buy America Strategy to leverage federal procurement to promote domestic production and innovation.

    And fourth point there is in thinking about our allies and competitors is promoting and enforcing strong international trade rules. We are going to continue to push back where we believe there are unfair trade practices and we are going to investigate some new tools to do so.

    And finally, we can’t discount the importance and our commitment to international economic engagement. I want to be very, very clear that the supply chain resiliency work is not about producing everything domestically. And in many cases, working to diversify international sources is the best solution that we identified. So, we need to do both.

    So, those are the top lines. As I mentioned in my bucket two, we did identify a number of sector-specific recommendations. And on many of these, we are moving forward with immediate action. Just to highlight a few on the pharmaceutical supply chain, the Department of Health and Human Services announced that it will use its $60 million in ARP funds to invest in novel manufacturing technologies to promote domestic production of certain APIs on advanced batteries.

    The Department of Energy announced that it would be using its LPO Program to leverage funds to support battery production, along with other pieces of the supply chain, including potentially critical mineral extraction and processing. And they also announced a strengthening of their R&D standards to better tie their public R&D investments to domestic production. So, what’s (consumed in) America will also be produced in America.

    On critical minerals, we announced that we are going to bring a comprehensive strategy that includes both increasing standards of U.S. production while also working with allies and partners to reach sustainable global supply. Specifically, we announced in our domestic effort that we are going to do a - identify 35 domestic sources for - 30 - work to identify, I should say, domestic change for three critical minerals that could be sustainably harnessed.

    And semiconductors, we’re obviously experiencing a critical shortage right now and the Department of Commerce doubling down on the work with industry and allies through industry convenings and other work with suppliers, increased transparency and communication and trust.

    There are a number of other immediate actions we are taking. For example, USDA announced more than $4 (billion) in investments in building a more competitive and distributed food supply chain. A number of international efforts, we announced including committing to - a commitment from the Development and Finance Corporation to consider high standards and sustainability in their investments overseas. And a new USTR Lab Supply Chain Strike Force to identify unfair trade practices and take immediate action.

    And we’ve already asked (unintelligible) to identify (unintelligible) investigation, a 232 investigation magnets, rare earth magnets.

    So, that’s just a handful, a little potpourri of some of the recommendations that can be actions we’re taking. Last thing I wanted to really highlight is over the course of this work, we identified (unintelligible) long-term structural challenges that will require years to address. These challenges have accumulated over decades. And they will take a significant period of time to address.

    But we also see immediate challenges in our supply chains right now. And so we announced in pace with the launch the formation of the Supply Chain Disruptions Task Force to tackle the near-term bottlenecks in four key industries, homebuilding and construction, transportation, agriculture and food industries, and the semiconductor industry.

    And this task force is led by Secretary Buttigieg, Raimondo, and Vilsack, and is focused on bringing all the stakeholders together, a gathering of needed data to help us navigate these crises, and identifying policy, solutions and/or private sector solutions that can move us forward.

    So, with that, I’ll close my remarks and I’m happy to answer any questions.

Rick Gabrielson:    Great, thank you. Anybody have any questions for Nellie? And as a reminder, if you’ve got a question and I hope you do, please go through and make sure that you state your name and the organization that you’re affiliated with.

Coordinator:    And if you’d like to ask a question over the phone, please press star 1.

Rick Gabrielson:    Maybe while we’re waiting for that to come in, and a question came up after Monica spoke and it came from Melzie Wilson.

    And her question was on the semiconductors. And you may not be able to answer this. But her question was it was her understanding that EPA was one of the reasons why we’re not able to manufacture semiconductors in the U.S. Has that changed or was that one of the issues in the past for the drop in production?

Nellie Abernathy:    Sorry. Did you say DPA or EPA as in the Environmental Protection Agency?

Rick Gabrielson:    Yes. I’m sorry. EPA as in Environmental Protection Agency, yes.

Nellie Abernathy:    So, that’s interesting. I - that wasn’t a core concern identified in the report or in the analysis, nor was it one of the top issues raised in our industry engagement, which doesn’t mean it’s not true. It just hasn’t been elevated as a top issue.

    What has been elevated as a top issue is the cost of fab construction in the U.S. compared with some of our competitor nations.

    And a significant part of that cost differential is the subsidies provided by some of our ally and competitor nations. And in the report, I wish I had the numbers in front of me. I apologize that I don’t. They actually outline the cost differential and what percentage of that is comprised of government subsidies for Taiwan, for China, and that provides some insight.

    So, I think there is a cost differential even with the subsidies. But many, many semiconductor firms tell us they do want to build in the U.S. It doesn’t have to be cheaper to produce here. It doesn’t even have to be exactly the same cost. We just have to do something to compete with the subsidies provided by other countries.

Rick Gabrielson:    Got it. Did - there’s a follow-up to that, Nellie. The question that popped in my mind when you were talking about low cost, you know, some of those are public organizations and companies. Oftentimes there’s a tremendous amount of pressure that gets put on them for cost controls, which may have forced them years ago, let’s say, to move it to a cheaper production spot.

    Did that come up in the course of conversation and how that might be viewed either on the street — I want to say it’s written in Wall Street — for those organizations as a way to make themselves competitive?

Nellie Abernathy:    One issue that came up quite a bit is the challenge with ROI on fab investment.

    And so there has been significant pressure from shareholders to go fab-less, for example.

Rick Gabrielson:    Yes.

Nellie Abernathy:    And so, part of it is not just constructing a fab in another country. It’s actually outsourcing the production entirely.

    And even Intel has seen, because the most advanced fabs are the most expensive, has seen shareholder pressure to reduce investments in fab and to…

Rick Gabrielson:    Interesting.

Nellie Abernathy:    …focus instead on the higher ROI activities of design. Unfortunately, what we see is that those activities are deeply linked in the semiconductor industry. It’s an industry where we do see a lot of learning by doing.

So, for example, right now, at the highest, the most technologically advanced nodes, Intel doesn’t produce them. We don’t produce them domestically. And it is the kind of industry where the further you get behind, the further it is - the more difficult it is to catch up.

Rick Gabrielson:    Yes. Got it. Okay. Thank you. Any other - or any questions for Nellie from the group?

Coordinator:    I’m showing no questions over the phone.

Rick Gabrielson:    Okay. Nellie, thanks so much for your time today. We greatly appreciate you taking time to talk to the group.

Nellie Abernathy:    I really appreciate you having me. And again, I’m so sorry for my delay.

Rick Gabrielson:    Thank you, Nellie. Have a good day.

Nellie Abernathy:    Thanks. Bye.

Rick Gabrielson:    Next up. Is Birat still with us for his presentation? There we go. Birat, I’ll turn to you.

Birat Pandey:    Thank you. Can you hear me okay?

Rick Gabrielson:    Yes.

Birat Pandey:    Okay, great. Thank you. Let me turn on my video for a minute or so here. Good morning, everyone, and thank you for the opportunity to present my - I’m Birat Pandey for Federal Highway Administration. I provide expertise in freight data applications, modeling, and engage in recent activities to advance freight analysis practice. I also manage Freight Analysis Framework Program for Federal Highway. And I’m glad to be here with you to provide an update on Freight Analysis Framework, which is also known as FAF Data.

    The Federal Highway has been publishing FAF since 1997. And it is a joint program between Bureau of Transportation and Statistics or BTS and Federal Highway Administration. Those of you who may know enough about FAF and its five-year of this cycle, there are a number of updates both relating to data and analysis tool. For those who are new to this trade data updated freight data from FAF could be useful for state and local freight planning purposes, such as development of state (treatment).

    Freight data from FAF is useful for understanding major commodities that are transported in and out of a region or and for identifying freight corridors. It is also useful to use as a model input for analytical purposes. And this data is available for the public through Federal Highway FAF web page and I have a link in the presentation.

    So, with that, I think I’ll turn off my camera to save some bandwidth here and get to the presentation. Can you move onto the next slide, please? Thank you.

    So, you know, my goal for today’s presentation is to inform about ongoing updates and to describe key features of FAF that are important to know for making data application. This is data application. This is “Range” from relying on freight data from FAF to inform state treatment or pulling trade statistics from FAF to highlight issues for private scoping. Or it may mean utilizing trade data for technical (unintelligible), model imports, or for other specific analysis.

    I’ll quickly step through these in the items listed on the slide starting with basic introduction.

    Next slide, please.

    FAF provides estimates of various types of commodities between metropolitan regions and states by various modes of transportation. This freight flow information is built on Commodity Flow Survey data, which is a national scale survey of shippers in the U.S. conducted by Census Bureau. BTS works closely with Census Bureau for implementation of Commodity Flow Survey and data and FAF. A poll of data FAF is done every five years in conjunction with the Economic Census. FAF data also includes estimates of freight truckloads on national highway system and also provides a long-term commodity flow forecast.

    The last poll of data FAF was based on 2012 Commodity Flow Survey data. And it is called FAF-4. The new version of FAF is called FAF-5. And it is based on National Survey of Shippers in the U.S. for year 2017. There are 132 FAF areas representing 50 states and District of Columbia. FAF forecast will include 30 of forecasts for 3 scenarios with a rise in year 2050. Will - it will also include forecast at a five-year increment.

    A picture on the left shows an example of origins and destinations that are available in FAF-5. This is an immense output from a FAF web-based tool that is available for the public to optimize - to obtain customized information.

    In this example of freight - in this example, it shows freight starting in Los Angeles and ending in New York, Chicago, and Dallas Metro Region. Similarly picture on the right side it gives an estimated freight truck flow pattern on the National Highway Network.

    Next slide, please. Thank you.

    This slide outlines major FAF-5 data products, current status, and key changes from FAF-4. In FAF-5, we have attempted to address some of the long-standing data users’ requests that is providing a more granular data and improving highway funding tool. The first one listed in here is FAF-5 major data. It is released and is available for download with FAF-5 this year data, which is year 2017 data release. Currently, we are developing FAF-5 forecast. Our FAF-5 30-year forecast as Horizon Year 2050. As I mentioned earlier, it will be published by late summer of this year.

    We’re also working on a separate FAF-5 project to estimate truckloads on a National Highway Network. Estimated truckloads will be published by late fall. There are a few significant changes to the highway modeling tool. The updated tool allows to pull out more detailed information about truckloads. Modeling Network is upgraded and hybrid modeling process is portable and transparent.

    The fourth one listed in here is a CFS, so Commodity Flow Survey 2017 Small Area Table. This is a new product that is available for use. More detail commodity flow information from FAF has been, you know, one of the long-standing requests from FAF users. This commodity flow data includes an increased geographical resolution for truck flows. But has lesser commodity details.

    And we hope that this new product will provide additional data for FAF users to further their analysis.

    And also, an example of this data in a bit.

    The last one is related to the web-based tool and pre-populated summary tables and map. There are a number of updates relating to that. Please, I encourage you to take a look at the Federal Highway FAF web page and, you know, get a sense of what it is and what are the new features there.

    As these new FAF by related data products are released, we will be organizing webinars to provide more update and more details, and available resources. If some of you are interested in tuning into those webinars, please feel free to, you know, send me an email or contact me and we’ll put you on the list.

    Next slide, please.

    This slide, we’re kind of switching the gear a little bit from what we’re doing with the updates with, you know, some additional information that would help make good application. This is - and this slide highlights few key points that are important to know, to decide when and how to use freight flow information from FAF. And it’s not necessary to know FAF data from cradle to grave to make data application. This isn’t.

    Like with any other data and forecasts, there are some limitation of FAF, and understanding its capability is key to make data application decisions. And I’ve listed some of its key strength and weakness and they help answer four basic questions.

    And they are what is covered in this data? How is - what’s the source for this information? And how is this data developed? What are the key assumption and data caveat? And how to access it? And what skills are needed?

    Two of these questions, what is the data source and what are the key assumption, are background information. And remaining two questions are technical in nature. But it can be learned relatively quickly by reviewing Key Populated Summary Table that is published on Federal Highway FAF web page or by familiarizing with the web-based data tabulation tool. And also, two examples that could be tested on their own by using published resources to increase familiarity with this FAF data set.

    Next slide, please. Next slide. Oh, thank you.

    This is an example of a Ready-To-Use Summary Table from FAF-5 for Kentucky. It highlights key trade destination for year 2017. The table on the top provides state-level summary.
    
    The story here is that half of the freight that started in Kentucky ended in Kentucky. A quarter of freight that started in Kentucky were transported to four other states with Tennessee being the second most important destination. The remaining 25% of the freight that started in Kentucky was transported to all other states.

    The second table below is for Louisville area. And it shows that West Virginia is more important freight destination for Louisville than Nashville, Tennessee.

    Next slide, please. This is another example of how statistics from FAF can be used to highlight freight for considering into (industry) business processes. This slide shows that truck carries a large portion of freight in Texas and freight tonnage is - and freight ton is carried by truck in Texas will increase by about 25% in next 25 years.

    Number presented here is based on older FAF-4-based forecasts developed five years ago. As I mentioned earlier, we’re currently working on a project to develop a new set of forecasts based on updated data.

    Next slide, please. This is a visual example of 2017 Small Area Commodity Flow Data that I mentioned earlier. This commodity flow data includes an increased geographical resolution than FAF shown. But has less commodity and more details. In this case example for Virginia, state geographies representing freight are doubled to eight areas, which is represented on right side of the images. FAF-5 delineates Virginia into only four areas representing Northern Virginia, Richmond area, Virginia Beach area, and rest of Virginia. And this is a special tabulation from a Commodity Flow Survey for year 2017 and it provides additional detail for FAF users to further their analysis.

    Next slide, please.

    I’m getting close to my presentation. Here’s another example of how freight truck flow estimates from FAF can be used to understand major freight corridors. Here you can see some example of truck flow images of varying scale. And these maps will be available for download for each state.

    Next slide, please.

    This is an example of new capability from highway network flow model that we’re working on. The picture on left shows major freight truck corridors between Dallas and Houston. And there are multiple truck (unintelligible) for this specific year. Picture on the right shows freight truck flow going into and out of San Francisco, California.

    For those who have modeling background, this is an example of select link or select joint type of function that can be done rapidly within the FAF-5 highway (semi) model. Again, we’re still working on this project. It’s not completed. And we plan to release this data by fall of this year.

    Next slide, please. Oh, this is - with this slide I’d like to end my presentation with a note that we’re currently going through a full update of FAF from FAF-4 to FAF-5. FAF-5 (visual) data and summary tables and web tool is already released. We’re working on developing FAF-5 forecast and FAF-5 highway truck flow estimates. And we’ll be organizing webinars to inform and provide more details on these resources as we release these products in stages throughout this year and early next year.

    There are a number of updates in FAF-5 for those who are familiar with it, both relating to Data and Analysis Tool to primarily address FAF data user shippers and their (MS) driven goal type of information that is already published.

    And there are tools to dig in deeper. But, you know, please keep in mind that FAF is designed to meet their data needs at a national level so agencies cannot completely rely on FAF products to meet all their freight data need.

    So, with that note, (I end my) - to this presentation and happy to receive feedback or answer any question that you may have. Back to you.

Rick Gabrielson:    Thank you, Birat. Thank you, Birat, very much. Again, if you’ve got a question, please press star 1. And ask any questions that you might have. Any questions for Birat? Jeff anybody coming in?

Coordinator:    I’m showing no questions. Oh, we just had one come in. One moment here. There we go. You have a question from Leslie Blakey. Your line is open.

Leslie Blakey:    Thank you. Very interesting presentation, Birat. We appreciate your giving us the information on how you all are proceeding with this.

    But the thing that’s most puzzling to me is that it appears as though there’s a multimodal aspect to this. A few of the slides showed rail and air and other and water components that almost all of your references are to truck flows.

    And I just would like you to elaborate a little bit on to what degree is the - I seem to remember the commodity flow used to - the survey used to have a lot of multimodal components to it. But maybe I’m mistaken. I just would like some clarification on how the staff is bringing all the modes together.

Birat Pandey:    Sure. Thank you for that question. And it is - your understanding is correct. Remember, there are two - three different - I mean there are two different data components to the FAF. One is related to origin, destination, flow of commodities between areas, right. It’s a table of metrics. You can think it of as a table of metrics. Then there is the transportation network flow components of the FAF.

    So, the origin, destination, commodity flow information, that data is multimodal. We have trucks, rail, water, pipeline, multimodal, and I’m forgetting rail. So, those commodities will - between metro regions and states are available by different modes.

    But we don’t assign all those commodities into different modes, such as rail, pipeline, air, and others. We just assign those commodity flow to a higher network relating to FAF. And that is missing components in FAF assignment.

    But there are other flow estimates that are done by different model administration. I believe FRA has their own flows’ processes, and Army Corps of Engineers does some modeling on the water flows. What FAF does - and there are some definitional differences. But if you want to have a consistent definition of transported freight at a maximum level FAF will provide that information for origin-destination tool.

    But those are not assigned in the transportation system for (unintelligible).

    Did I answer your question?

Leslie Blakey:    Well, yes, you did. I just think that that’s a huge shortcoming of the system. And I would like to urge USDOT to try to expand the capability of the FAF to include all the modes and the stove piping within individual modal administration is -really does seem like a continuation of the process of not providing a clear picture of how the modes work together to move our goods and a huge limitation for planners. You mentioned the state freight plans and so forth, which are - Congress has been requiring to be multimodal. These kinds of things can’t really profit from the FAF unless it’s a multimodal picture.

Birat Pandey:    Thank you for that comment. And we have, you know, identified that as one of the areas for improvement, for sure, you know, maintaining a multimodal network as a modeling network. You know, it’s just not any network. The modeling network has some specific requirements.

    So, there are some technical challenges related to be able to maintain a multimodal network, multimodal modeling network at a national scale. So, we are actually actively working on that aspect of the Freight Analysis Framework. But we’re not - we don’t have that capability right now.

Leslie Blakey:    Okay. Thank you.

Birat Pandey:    Thanks.

Rick Gabrielson:    Thanks Leslie. Any other questions for Birat?

Coordinator:    I’m showing no other questions.

Rick Gabrielson:    Okay. Birat, thanks so much for your time today. We greatly appreciate you coming in and talking to the group.

Birat Pandey:    Thank you for the opportunity.

Rick Gabrielson:    Thanks so much. With that, I think next is Valerie Nuehart, which she is going to give us a CBP update. Is Valerie with us?

Valarie Neuhart:    Hi there. I’m here. How are you?

Rick Gabrielson:    Hey great. Valerie yourself.

Valarie Neuhart:    I am good. Thank you.

Rick Gabrielson:    Good (unintelligible).

((Crosstalk))

Valarie Neuhart:    So, I was asked to give an update on a few things. Did you have anything specific or shall I just dive in?

Rick Gabrielson:    Go ahead and dive in.

Valarie Neuhart:     All right, great. So, I know this particular group has interests of varying degrees in multiple ongoing projects on the CBP side of things. So, I’ll go ahead and give a few high-level key points, because I know we have brought multiple subject matter experts to you all to have more detailed dialogue around each of the focus areas.

    So, I thought it would be best if we kind of brought some of the most recent updates and then we can have some time for a few questions, or in fact, we can even take things back and maybe have some follow on discussions around any of the desired area.

    So, first, in our inbound movement area, I wanted to share that CBP in collaboration with industry they’re continuing an in-depth regulatory review. And what I mean by that is that our combined CBP industry team is looking through our regulations into areas in which they can identify where CBP regulations touch the inbound process, where the regulation section may not be specific to inbound processing. Where - so they’re hoping to identify any regulations that would be impacting the inbound process overall just so that they can also identify potential process improvement areas or areas that are specifically ridden with a paper process or paper requirement.

    So, in light of all the advancements we’ve made, of course, in our automated commercial environment in ACE, you know, we continue to look to areas that either need enhancement or improvement. And with our impending kind of inbound modernization effort, we want to make sure that there are other areas that we have considered and specifically where hand-offs are concerned throughout the inbound process. You know, there are virtual handshakes and there are hand-offs in which we haven’t necessarily captured by the automation process we have in place.

    And of course, this is all feedback we’ve received from our industry partners. So that work is ongoing. Also, they are looking to possibly have something identified and outlined by September so that that’s their current deadline. More to come there.

    And on the side of the brokers, you know, we are waiting for broker continuing education proposed rulemaking. So many of you are probably aware of that. We are waiting on that.

    But I do have some exciting news for the first time ever. And we were able to host a proctored, a remote proctored exam for the broker licensing exam. We had 185 exam takers. And that was the first time we were able to support a remote proctor.

    And that occurred in April. And that was during the last public broker’s license exam dissemination. So, there were hundreds of others that were at on-site exam location. So that was an exciting point of modernization for us.

    And again, I, you know, I will share that we are waiting on the proposed rulemaking for the broker continuing education. So, I believe it’s a Notice of Proposed Rulemaking. So, once that comes out, you know, we welcome everyone’s comments and feedback, of course.

    In the area of forced labor, we continue to work with industry to update the Fact Sheets that we have posted online. And what we’re really looking for there with our industry partners is to identify areas on the Fact Sheets that we could potentially have some added clarity or provide some additional detail so that we can, you know, assist our industry partners on achieving compliance in the forced labor area.

    CBP will be hosting Forced Labor Industry days next week where we will have government panelists that will have the opportunity to view varying degrees of forced labor technologies. And demonstrations of those technologies will be presented to a government panel. The focus is around technologies and the traceability of country of origin, identification of country of origin, as well as traceability throughout complex supply chains.

    So, we’re really looking forward to kind of seeing what’s out there, what industry partners are using and what is working well. And we have some. Our plan currently would be to absorb the outcomes of those industry days and take it back to our industry, joint industry CBP Working Groups so that we can share what the outcomes were, what we’ve learned, and then possibly get some added layers of feedback on how things like those technologies are working for some of our industry partners.

    I will also share. We have some ongoing collaboration with the industry to develop forced labor requirements into our Trusted Trader Program. So, we’re hoping that we will have that work completed sometime into FY 2021. So, we’ll see where that takes us. But definitely keep an eye open for that.

    In the area of USMCA, I would definitely like to share that we have published a number of resources to include Compliance Guides to assist our industry partners in navigating the provisions of USMCA.

    And I believe we might have had a USMCA speaker on a couple meetings, a couple ago, past meetings of yours. But I did want to share that, you know, there are implementing instructions there. And I’m not sure if they shared that there were Fact Sheets that were posted online.

    And what I personally have found interesting about the Fact Sheets, if you haven’t looked already, they’re a very nice side-by-side comparison of NAFTA to USMCA. So, very user-friendly. And I highly recommend, you know, industry partners or your clients check, look into those because they were very informational.

    Also, as you may know, we are all anxiously awaiting the posting of the USMCA regulations. And we’re looking for those to be published no later than July 21st, or, I mean July 1st of 2021, sorry, this year.

    And what I’d like to share in more detail there is CBP plans to continue to collaborate with our industry partners through the COAC following the publication of those rules, those regulations, so that we can obtain feedback on how the enforcement implementation is going. And that way, we can potentially learn more from industry as well as share with industry what we’re experiencing. So, we are looking forward to that effort once the rules have been published.

    I do want to share that that includes domestic and automotive-specific regulations, if you weren’t aware already. But I’m sure you’re probably all anxiously waiting for them.

    In the area of e-Commerce, I know you’ve all heard quite a bit about our data pilots in addition to the requirements that were published, of course, on the $800 de minimis per day per person or limit on per day per person. So, we have established some outreach sessions. Those outreach sessions are ongoing. They are targeted for vendors and suppliers and industry, entity types that engage in, you know, high volume areas of those types of transactions. We have also recently recorded a webinar to share publicly. And we’d like to get the information out as wide and vast as we can. The webinar includes closed captioning and we’re working on getting that translated into simple Chinese.

    But we are asking that all of our industry partners share the webinar and with their vendors and suppliers and customers that engage in the $800 per day per person trade type volumes. And we’re hoping that it’ll provide an additional opportunity to educate those types of suppliers.

    So, very informational there. We’re happy to share the links with this group once it’s completely posted online. We’re even looking to a YouTube option for posting of that webinar so we can get it out as many as possible.

    The Section 321 and entry Type 86 data pilots that I just briefly mentioned, I know you’re all probably very aware of those. Again, if not, we can bring in a subject matter expert to dive into those into more detail.

    But I do want to share for those of you that are familiar. CBP is looking to extend the pilot until we can - the timing, the duration of it, because, as you know, I think the notice had it up through August if I’m - that’s off of memory. So sorry if that’s not accurate.

    But we are looking to extend the duration of the pilot until we can formally replace it into a, you know, a formal data collection process. And we are continually learning from the outcomes of the data pilot.

    But we are also looking to expand the pilot to include additional participants from the amount of participants that are engaged now. More to come there. Of course, that would be by public notice. And so you’ll be completely aware of when we actually get to that point.

    But we are hoping to expand it to include additional participants. And I really wanted to share that with you.

    And as many of you know, CBP is working on regulations to establish the 321 Type 86 data pilot processing. So, you know, to make that more formalized. And of course, there would be a comment period. So, you know, don’t feel like it’s something that’s going to happen overnight. But we are working on that rulemaking and you will be seeing that shortly. I say shortly. But, you know, that’s months and months, not days, and not weeks. It’s months.

    In addition to those areas, I think that our 21st Century Customs Framework might be on the forefront for many of you. And really, you know, we want to share just a little of where we are with that. Our intent is to be very transparent in this area. If you are not aware of our activities in this space, please reach out to Craig and I. If you don’t know how to reach out to me, you can contact me through Rich, Rich Boll, or others on your committee.

    But we are even happy to arrange for, you know, some briefing or conversation with, you know, you or your members or your customers. We want this to be a transparent effort of modernization and partnership with our industry partners.

    And so, if you haven’t heard enough about it, then please reach out to me, because we can definitely arrange for that. But we did formulate a - we call it 21 CCS. We have formed a 21 CCS Government and Industry Task Force. And we are looking to make sure that we have adequately taken into consideration what modernization efforts would be.

    And we are achieving modernization in the areas of policy, regulatory, statutory changes that - and this effort also includes our partner government agencies. And we’ve included as many industry sector representatives as we can think of for our trade industry partners.

    But we’re really trying to look forward what trade could look like down the road. And you know what we need to change in our areas of regulations, policies, even technical areas, and what legislative updates would need to occur so that we can get to, you know, some reform and some modernization. We have identified five specific areas of some of what we think to be some of the biggest impediments and to achieve this effort of trade modernization. One is our limited data collection area; two, restricted data usage, narrow visibility and accountability, untimely and ineffective enforcement, and insufficient funding so that we can, you know, keep efforts ongoing.

    And the one thing I will share is that we’ve created a task force. It’s a very large task force because we intentionally wanted to ensure that we had as many industry sectors represented as possible.

    And what we were going to do there is, you know, look at operational challenges. You know, what are the drivers that that get us there? What gets us over it? What does the future state look like, you know, in the area of trade?

    And so, a huge modernization effort. And we want to do this in effort with our trade partners. And so, like I said, if you have not heard enough about it, please let me know, because we can definitely extend some messaging to you.

    The other thing I would share is in the area of export modernization. And I highly encourage all of you to go to our web site. It was just posted yesterday as an outcome of our COAC Public Meeting. It is - there is - actually let me start over. On the web site, we have posted a Export Modernization white paper.

    And what the white paper was intended to do was to basically document a strategic roadmap to export modernization. And that umbrella would definitely cover process, including the technical piece, automation, you know, regulations, laws, you know, effective enforcement, enhanced facilitation on export movements.

    So, you know, we were really looking for an updated export strategy. And this effort, the paper is an outcome of a multi-year effort of a team of CBP, Bureau of Industry and Security, the Census Bureau, and industry representatives. And it was a huge effort.

    Again, I highly recommend for those of you whose businesses are impacted by, you know, our export enforcement or facilitation to take a look at it. I will share that only a part of it is online because we haven’t posted the process flows just yet. But all of the contextual elements are posted.

    And, you know, we’re really excited about that. And there’s definitely more to come around the area of export. Some of the ongoing work will be to further refine the strategy and to further identify, you know, what that road map would look like. Although, like I said, there are many appendices that identify the road map process in the area of export on that document.

    But again, it’ll be a joint effort between our partner government agencies, ourselves, and our industry partners so that we can further refine what the work they’ve done to date but a multi-year effort. A lot to be proud of there in our collaboration efforts with industry.

    And I think that really hits everything I felt like you all might be most interested in. So, I’m happy to open it up to questions and see if there are any, you know, necessary follow-ups. Like I said, we’re happy to have a follow-up dialogue either within the environment of this group or with - as a follow on one on one type discussion so.

Rick Gabrielson:    Great. Thanks Valerie. Any questions for Valerie?

Coordinator:    As a reminder, if you would like to ask a question, you can press…

Valarie Nuehart:    You all are letting me off easy this time.

Coordinator:    …star 1.

Rick Gabrielson:    Is there a question?

Coordinator:    There are no questions right now.

Rick Gabrielson:    And we’ll give it a second here and see if anybody has a question for Valarie.

Valarie Neuhart:    Absolutely. And, you know, we are very familiar with many, if not most of your members. So, please feel free to reach out to us directly following this discussion. If anything kind of triggered a thought or a follow on question down the road., again, please reach out to us. You know.

Rick Gabrielson:    Okay.

Valarie Neuhart:    I think, honestly, the CBP Teams can speak to these things for hours on end. So, we will make ourselves available.

Rick Gabrielson:    Great. Thanks much. If anyone does have any questions that you think about after this presentation for (Valarie), you know, please just, you know, send her a note. I think most of the folks in trade have got her contact information. If not, we’ll provide it to you.

    With that, (Valarie), thanks so much for spending time with us today.

Valarie Neuhart:    Thank you. Thanks for having me.

Coordinator:    Excuse me. We do not have a question for Valarie.

Valarie Neuhart:    And stay safe, everyone.

Rick Gabrielson:    Thank you. Next, before we take a break.

Coordinator:    Mr. Gabrielson.

Rick Gabrielson:    I’m sorry. What was that? We jumped in. Next, we’ve got Michael Blatt is with us. He’s with the U.S. Department of Labor to talk to us about workforce development. Michael.

Michael Blatt:    Good morning, all. First, I’d like to take this time to thank the committee for giving me a few moments just to give you an overview of registered apprenticeship. My name is Michael Blatt. I am the State Director in New Jersey for the U.S. Department of Labor Office of Apprenticeship. And again, I thank you for the invite.

    I’d like to start off this small conversation, just giving you a little background on what registered apprenticeship is and how it can solve the workforce development issues that are arising during these unprecedented times that we’ve just sort of gone through and we’re still going through.

    So, the first question I’m always asked is what is a registered apprenticeship. And at the base level, registered apprenticeship is basically an employer-driven and that’s really key, customizable, flexible model for developing and training an employer’s workforce.

    But it can also be used not only just for recruiting new talent, but it can also be used to upskill your incumbent working work staff. Using an apprenticeship approach, businesses with skills gaps can always take steps to ensure that their workforce is trained to meet their present and future needs.

    But there’s a couple of key things that separate registered apprenticeship from most workforce development strategies or training programs.

    And the first one, and the most important one, is that apprenticeship is a job. Their real jobs. Apprentices, when they’re hired or when they’re entered into an apprenticeship program as an incumbent worker are paid by their employers during the course of their apprenticeship.

    And during that time, the employers are training these incumbent workers or upskilling these incumbent workers, or training these new workers, not only in terms of industry-recognized standards, but in terms of firm-specific standards as well. It’s a very customizable training method.

    And there are two components to it. And this is what sort of separates registered apprenticeship from most other training programs is you have an on-the-job component that is basically workers are trained by mentors, individuals with experience in your company that can train or upskill these workers. And at the same time, there’s an educational component that provides supplemental knowledge to what your workers or what your labor staff are learning on the job.

    And at the end of this, they’re basically given a nationally recognized portable post-secondary credential, a Certificate of Completion.

    So, why utilize this?

    One of the things that I heard at your North Jersey Subcommittee Meeting was that there’s an immense difficulty right now in finding qualified workers. Today there’s basically over 7 million jobs that remain unfilled due to the growing skills gaps that exist in not just your workforce, but in the workforce nationwide. And many of these vacancies remain unfulfilled because employers, like yourselves, can’t find workers with the right skill. 

    Other factors could be that you have, you know, an aging workforce. One of the most successful things about registered apprenticeship is the ability to transfer the institutional knowledge of your company and of your - of these occupations to your new workers through the supervision of skilled workers. It’s a great way of planning, not only in terms of retaining workers, but in terms of planning a - having a succession plan as well.

    Today, especially with all the new technological advances, which include - can include things as artificial intelligence or virtual augmented reality, these technologies are radically changing the face of the workplace. A registered apprenticeship is uniquely positioned to be able to assist employers in developing these workers and being able to introduce these new skills to their workers.

    And in fact, and over the last two years, we’ve seen a tremendous exponential growth of registered apprenticeship in this country to the tune of over a .5 million new apprentices.

    From the business side, this is a very, very successful model, though. It has - you know, studies have shown it has almost a 94% retention rate and a proven rate of retention. I mean, last study that the Department of Commerce actually did on registered apprenticeship, I think attached a - for every dollar spent on registered apprenticeship training, it was a return of investment of $1.46. That’s a pretty good rate of return.

    And companies of all sizes can utilize this. It’s not just limited to large companies. It’s not just limited to small companies. This training strategy can fit almost every company’s needs.

    The other side to this is this is a very successful way of not only of recruiting the talent that you need but by creating pathways to increase the diversity and equity in your workforce as well. One of the things that registered apprenticeship does through the U.S. Department of Labor is we are putting an enormous amount of effort into expanding the ability for regardless of ethnicity, gender, zip code, to include individuals into these programs.

    And it’s been highly successful right now. Right now, there’s over 1000 occupations that can be - that we can utilize registered apprenticeship for. Many of them are in the Transportation and Supply Chain sector. There are any - if anybody has any questions, we have a web site, apprenticeship.gov, that has an enormous amount of information there as well. I would be more than happy also to give you all my contact information. 

    And I’d be more than happy to facilitate any further discussions or any questions that you might have in terms of how can you as employers utilize apprenticeship. I’d be more than happy to facilitate any meetings or answer any questions or direct you to somebody in your own states that would be more than happy to assist you in developing these programs.

Rick Gabrielson:    Thank you much, Michael, great stuff. Anybody have a question for Michael? If you do, please press star 1.

Richard Boll:    Hi, Mike. This is Rich Boll, you know…

Michael Blatt:    Hey Rich.

Richard Boll:    …(unintelligible), you know. How are you doing? Yes. Thanks for, you know, coming on today and giving your - of what you guys are doing at Department of Labor. You know, this came about from Anne Strauss-Wieder having a call, you know, with her subcommittee. And you were on it. And it was great, very informative.

    I also wanted to bring up the points that I find that was kind of interesting and maybe you can go on it a little bit further. But, several states themselves, they do their own apprenticeship programs. But on the other hand, states don’t and they go directly to the Department of Labor to do these types of programs.

    So, how does the advantages of using Department of Labor and, whether if states, use your program versus the individual states doing their own?

Michael Blatt:    So, that’s a great question and sort of really dives into details how the national apprenticeship system is organized and works within United States.

    So, right now, there’s a 50/50, approximately a 50/50 split between states that run their own state approving and agencies or SAA states or states that are called - that are known as federal states that are under the offices - directly from the Office of - U.S. Labor’s Office of Apprenticeship.

    At the end of the day, we all follow the same regulations. The states that are not federal states are certified by our administrator to be able to provide that - those services.

    But it’s a seamless system so that you have occupations that are nationally recognized and you can have in certain states occupations that only that state might recognize.

    But at the end of the day, it really depends on what state you’re in, depends on whether you’d be working with the U.S. Department of Labor’s Office of Apprenticeship or that particular state’s state approving agency. In essence, we all do the same thing. Granted, some of the states might have some - might have small ways of doing other things.

    But at the end of the day, we all fall under the same national apprenticeship system. It’s just a question of how that registration proceeds. But the requirements for registered apprenticeship are basically the same throughout the nation.

    There are a few ways of going about doing this. So, in states that are federal states, that are OA states, typically we would develop programs on a local level. If they’re - if the companies that are - there’s a company that’s interested in developing a program and it’s located in more than one state, we can utilize national standards that will encompass every one of their locations or if there are employers or organizations that are in multiple states that we’re requiring local registration due to maybe workforce development funding requirements or whatnot, we can use individually tailored state (agencies) as well.

    But overall, the system is very - it’s a national system.

Richard Boll:    Thank you, Michael. Appreciate it.

Rick Gabrielson:    Thanks, Michael. Any other questions or any questions I should say for Michael?

Coordinator:    Yes. We have a question from Anne Strauss-Wieder. Your line is open.

Michael Blatt:    Hey Anne.

Anne Strauss-Wieder:    Hi. And Michael, thanks so much for the presentation today. And as Rich noted, when our Workforce Subcommittee met, you talked about the work that you’re doing very specifically with the City of Newark. I’m not sure if that includes their new CDL Program.

    But if you can talk a bit about how you as, you know, part of a federal agency, interact with a locally based or in this case, the City of Newark and developing programs. Thanks.

Michael Blatt:    Sure. So, one of - over the last couple of years, one of the strategies that we’ve sort of been - that we’ve been utilizing with the Office of Apprenticeship is the idea of intermediary sponsors. And what an intermediary sponsor is it’s a sponsor that’s going to handle the administrative portions of the Registered Apprenticeship Program and then seeking out employers that will sign onto that program that will actually be the ones responsible for delivering the individual training to that individual company’s employers.

    Newark, we’ve been in discussions with Newark and specifically the Newark Workforce Development Board in terms of them becoming an intermediary sponsor. Now, the advantage to that is at that point, you’re casting a wider net. And you’re taking - by operating with an intermediary, what you’re doing is you’re taking that administrative task that an employer might be reticent of, you know, of being involved with and giving that responsibility to the intermediary sponsor.

    It’s a very successful method of recruiting registered apprenticeship participants because most - many companies, especially small companies, might not have the staff that want - that they’re able to spare in terms of doing the administrative tasks.

    And let me be really clear. The administrative tasks are not owners. They’re - it’s a pretty straightforward role that sponsors take. They have to ensure that their employees that are being trained as apprentices are, in fact, being trained in the work process or in the standards for that occupation. They have to ensure that the employees are doing their supplemental education and just keeping track of the program itself. The majority of the work really is trickled down to the employers who are actually going to be utilizing their own workers as mentors to train or upskill, whether they’re incumbent workers or new workers.

    In Newark, one of - we’re in the process of discussing Newark’s Workforce Development Board and becoming intermediary sponsors because they realized that there is a need not just in the Supply Chain sector or in the Transportation sector, but in the Construction sector as well, especially in terms of the projects, in terms of replacing most of the lead pipes in Newark, that they’re not able to retain or recruit workers effectively.

    And this is one of the ways that they feel that they can do that. Intermediary sponsors don’t necessarily just have to be a government agency, though. Although they’re all government agencies that now do have Registered Apprenticeship Programs. For example, in New Jersey, the New Jersey Department of Health runs a very successful Registered Apprenticeship Program on their own as an intermediary for various hospital employers, for community health, for the occupation of community healthcare workers.

    So, it’s a very flexible model. And we can really tailor it and fit whatever that employer needs in into a Registered Apprenticeship Program.

Anne Strauss-Wieder:    Thanks again.

Rick Gabrielson:    Thanks so much, Michael. Any other questions for Michael?

Coordinator:    I am showing no other questions.

Rick Gabrielson:    Michael, go ahead.

Michael Blatt:    Well, I do appreciate the time. I did want to give - our website is a - it’s really simple. It’s apprenticeship.gov. There’s an immense amount of information in terms of how to become a registered apprenticeship sponsor, about intermediaries, about the occupations. I encourage everybody to explore it. And I thank you for the time.

Rick Gabrielson:    Thanks much. Maybe we can get it out in our notes as well, Rich, so folks have got it available for them.

Michael Blatt:    And please feel free. Anyone feel free to reach out to me. And if I - if it’s something that’s in another state, I’ll be more than happy to facilitate setting up meetings for you to discuss it with the various state entities. So, I appreciate the time.

Rick Gabrielson:    Perfect. Thanks much, Michael, for your time today and great efforts.

Michael Blatt:    No worries. I thank you all.

Rick Gabrielson:    Thank you much. Okay, with that, folks, I think we are up to our break. Have about 55, 56 minutes for lunch. We’ll be back at, what, 1:00 pm Eastern Time, right, Rich?

Richard Boll:    Yes. That’ll be fine. And we hope to see everyone back at 1:00. And you have to decide if you want to keep your phone on or if you want to re-check back in at the 1 o’clock hour.

Rick Gabrielson:    Sounds great. Talk to everybody in about an hour. See you.

Coordinator:    Welcome and thank you for standing by. We will now begin the afternoon session. You may begin.

Rick Gabrielson:    Thank you. Good afternoon, everyone. Hopefully, everyone had a nice break. This afternoon, we’ve got three presentations that we’ll go through. Then we’ll have some discussion on supply chain and supply chain challenges that are out there. And then we’ll get into our different subcommittees and have each of them present what they’re looking on or what they have (done), or in one case, we’ve got a recommendation for the group.

    So, with that, our next speaker is Jennifer Gibson. Jennifer is the Vice President of Regulatory Affairs for the National Association of Chemical Distributors. And she’s going to chat with us today about supply chain issues in the chemical industry. Jennifer.

Jennifer Gibson:    Great. Thank you. Do we have - did you say you had my slides? There we are. Great. So, good afternoon, everyone, and good morning to any of those of you who may be in the western part of the country. I really appreciate the opportunity to speak to you today about the supply chain challenges that my industry, the chemical distribution industry, is having.

    Next slide, please.

    Great. So, who is - so what - who is NACD and who are our chemical distributors?

    Probably the most important industry that you’ve never heard of. So, chemical distributors play a really critical role in the whole industrial supply chain. Chemical distributors purchase chemicals from chemical manufacturers, Dow, BASF, all the big chemical companies, many overseas companies. And take those chemicals and process them and transport them to all the industries who need chemicals to make their products.

    Our association was established in 1971. We’re celebrating our 50th Anniversary this year. And so, most of our - we have about 250 distributor members and then we have about 200 also supply chain members. Those can be the chemical suppliers, the warehousing and logistics companies, regulatory consultants, insurance companies, companies like that. So, it’s a group of about 450 of us concerned about these issues.

    And chemical distributors do serve many functions. They warehouse chemicals for our customers, do some processing, blending, repackaging, and labeling. And then, of course, finding all those industries out there who need the chemicals. So, very customer service oriented.

    Next, please.

    So, these are just some of the industries that chemical distribution serves, cosmetics, food and beverage, pharmaceutical electronics, and soaps and detergents, which of course has been very important over the past 15 months or so with the COVID-19 pandemic. And many, many others, just about everything you can think of needs these chemicals to make those products.

    Next slide, please. And these are just a couple of visuals about how our industry works. Talked about this a minute ago. So, our members get chemicals from the manufacturers and then our role is number two as the distributors and then transport them to all the customers out there.

    And then on the right is a chart that we developed a couple of years ago about chemical supply chain scenarios, talking about, you know, how the chemicals are packaged, which can be railcar, intermediate bulk container, drums, all sorts of things like that. What are the transportation modes used? What are the agreements with the suppliers and the customers to deliver those goods? So, pretty complicated. So, if anything goes wrong throughout that process it can have pretty major ramifications.

    Next, please. So, about the beginning of the year, we were having a meeting of one of our committees and it was not even on the agenda, but several of our members brought up this issue of how it was taking a long, long time to get products in from overseas. Many NACD members, if not most, import chemicals from overseas. A lot - many chemicals are no longer manufactured here in the U.S. so they are sourced from Asia and other parts of the world. And that’s become a really important part of the business for most of our members.

    Also mention that many of our members are very - most of our members are small businesses. We have a few very large international companies and regional companies. But the average NACD member is 26 employees, $26 million in revenue, and 1 to 3 facilities. So, we’re talking small companies here.

    So, they were telling us about how they were seeing delays. What used to take maybe two weeks to get to the country is now taking six, doubling of prices per shipping container. And so, this might really be a problem.

    And, of course, there all measures of (electives). Everybody’s heard about how COVID-19 has led to problems with production shutdowns in the other nations and as well as here. The port workers getting sick and not being able to work as much.

    And then, of course, some people, just in general, and not spending money on restaurants and vacations and things like that spent more money on goods. So, we had the worker shortage combined with the increased demand for products. And here we are today.

    Some other issues we’ve heard about or you’ve probably seen in the news. The container ships stacked outside of the West Coast ports. At one point, I think there were there were 30 or more container ships sitting out there off the coast of Long Beach, LA, and even the Oakland area. So big, big problem. And then once they got into the port, it would take days to get everything unloaded and on its way on the ground. So, that led to increased demurrage and detention fees.

    And then lately, we’ve been hearing that some of the ocean shipping companies don’t want to accept hazmat and hazardous materials, which, of course, a lot of chemicals are. So, we are trying to figure out whether that means that the products just get bumped from a particular shipment or if they’re saying they don’t want to take on that liability.

    And if that’s the case, that’s a real problem, because, under the Shipping Act, they are not allowed to do that. So anyway, that’s just kind of a nutshell of the problem.

    So. we have gotten to know the Federal Maritime Commission very well over the last several months. The FMC, they do several things. They’re in charge of looking at this whole ocean shipping industry and issues. We learned that they have Consumer Affairs and Dispute Resolution services, which I’m not sure if anybody’s actually used because there’s always the fear of retaliation if a shipper finds out that you have - that a company has complained about them. As bad as the problems are and as much as things are delayed if - I guess the fear is if the carrier finds out that there was a complaint filed against them, they will knock that company shipment down even further on the list. So that’s a concern.

    Commissioner Carl Bentzel held a webinar on the state of shipping for the NACD membership back in February. And it was a very depressing webinar. Carl predicted that these problems would continue at least through the upcoming holiday season into the beginning of Calendar Year 2022.

    And the way things are looking now that is certainly playing out. The FMC is also standing up a National Shipper Advisory Committee. And we are trying to get some representation on that.

    And then we also sent - our President Eric Byer sent a letter to the FMC back in May really talking about the urgency of these problems because really some of our members are really starting to suffer here and not being able to get products to their customers. The FMC does have a couple of fact-findings going on about the ocean shipping crisis, fact-finding 28 and 29. These have been going on for a while and we haven’t really seen any actions come out of that. So, that’s what prompted our letter.

    We also have been publishing some opinion pieces. I’m here talking to you today. We’re collaborating with other groups who have some of the same concerns. We’re just trying to talk to anyone who will listen and trying to get some action to address this problem.

    Next slide, please.

    So, in March, we conducted a survey of our members to really try to get a bigger picture of how severe the problems are. We had talked to many people just face-to-face or screen-to-screen or over the phone. But really wanted to get some numbers.

    And our survey did confirm that we have what we had feared that there really is - shipping was becoming much less reliable. Couple of data points we found, I think it was 84% of those using West Coast ports had delays, average delays of at least 11 days or more. One company reported delays as much as 150 days. That’s almost half a year. That’s a really long time.

    And 16% experienced delays of 3 months or more. And then on the financial side, many members have experienced losses. of $100,000 or more. And that is a lot of money for a very small company.

    So, we are now, and we just wrapped up a second survey to see if things are getting any better. I wish I had results of that for you today. But they’re being tabulated right now and should be available next week. So, if anyone’s interested, I would be happy to share that with you.

    Next slide, please.

    So, back to the Federal Maritime Commission. We have, of course, been working with them in addition to talking with Commissioners, including Carl Bentzel. We’ve also spoken with their Bureau of Enforcement to see what we could do about this. We are considering launching a formal complaint with them to see if they can take some action. It’s a matter of really getting some concrete information as to whether these carriers really are refusing to carry hazardous materials because they’re hazardous material or they’re just the shipments that happened to get bumped in favor of something else. It’s tough for many of our members because while these shipments are their livelihoods, in the grand scheme of things, they’re small compared to a Walmart or someone, a huge, huge customer for the ocean carriers.

    So, that’s why our members have been really put at a disadvantage.

    But it’s critical that a lot of these products get into the U.S. So, we’re trying to see if we have enough to actually do a formal complaint.

    And we’ve also - there’s been some Capitol Hill outreach. Just last week, a couple of things happened. On Tuesday, the House Subcommittee on Coast Guard and Maritime Transportation held a hearing on all of these issues. So, we were really pleased to see these issues getting attention at that level.

    And then on the Senate side, Senator Shelley Moore Capito of West Virginia sent a letter to the FMC about this. So, a lot more attention on The Hill, which we’re very happy about.

    Next slide, please.

    We have also come up with a whole list of possible solutions to address these problems. Some, they’re probably long-term, but we really wanted to get the discussion started. So, one is to dedicate some infrastructure funds to these freight bottlenecks, really making sure the infrastructure at the ports is solid and they have everything they need to process the shipments as quickly as they can. Providing some requirements or incentives for the ocean carriers to provide real-time tracking of the vessels. Believe it or not, that doesn’t exist.

    You’d think that would - in this day and age, that would be something that could easily be done, but that would at least be very helpful for chemical distributors to be able to give some more details to their customers about why their products are being delayed so much. Of course, ensuring full utilization of customs, automated commercial environment. That’s a good system. Just want to make sure that that’s being fully, fully utilized. Supporting the U.S. manufacturing base for shipping containers.

    And shipping containers, that’s been a - that’s part of this problem too. There’s just a lack of containers. And most of these containers, shipping containers are manufactured in China. So, there could be more incentives to have more of these manufactured here. That would be helpful to provide more of those to the industries who need them.

    Prohibiting ocean carriers from assessing demurrage fees when ports are not operating or when they have huge backlogs or delays. A lot of these fees that are being imposed on our members and other industries are for delays that are being caused by no fault of their own. So, we’d like to see that addressed.

    Next slide, please.

    Another idea is to compel the port to beef up their ships once delays hit a certain number of days, three days, five days, seven days. Way to force them to bring more people in to get these vessels unloaded. Incentives to encourage more to enter the longshoremen and port worker trades, even trucking and surface transportation. I think that would be something we’d probably all agree on across the political spectrum to get more job training and vocational programs going because these are very important critical functions.

    And then back to also with surface transportation, another issue. We have a real shortage of truck drivers. And we would like to see the Department of Transportation really and particularly Federal Member Carrier Safety Administration, not only regulate this industry, but promote it and really talk up trucking as a critical industry to the economy here.

    And then finally, we’d like to see an Emergency Meeting of the FMC and the Surface Transportation Board, which oversees the rail transportation industry on just this whole shipping crisis on the sea and then when it gets taken over at the surface.

    Next slide, please.

    So, spend a little bit talking about surface transportation and the issues there. Mentioned the truck driver shortage. That’s been - that was a problem before COVID and now it’s even worse. And so many drivers are retiring and not many are wanting - not many new people are wanting to come into the business. So, really need more person incentives to get to get more drivers in the industry.

    We’ve had ongoing rail service concerns and pricing concerns with the railroads. There are only four major Class 1 railroads in the U.S. So, they have a real advantage in dealing with customers. And most of them have implemented something called Precision Scheduled Railroading in the past few years, which is good for them and their bottom lines. But not so much for customers. And precision, you’d think it would be - make it more dependable, but it’s really caused a lot of backlogs and this was happening way before and COVID. And COVID has even made it worse. So, we’ve had delays at the intermodal facilities from two to three weeks. There’s another merger now pending between the two railroads, which we’re a bit concerned about that.

    A little bit on the good side for us. There is a Railroad Shipper Transportation Advisory Council. And we, NACD, we have two members serving on their Executive Committee. One is the Chairman. So, the Surface Transportation Board has really over the past two or three years, been paying a lot more attention to these issues and really done some things to see the shipper’s point of view. In fact, a couple of months ago, they issued a final rule to require more details on demurrage bills, which is very, very helpful. So, we’re very happy to see the increased focus on those issues.

    Next slide, please.

    And then some additional legislative activity. Of course, we’re seeing what can be done in the infrastructure package. That’s still being negotiated, of course. So, not sure what the details of that, but we’ll take what we can get there.

    And then there’s also a bill called the Drive Safe Act, which would allow 18 to 20 year-olds with commercial driver’s license to drive across state lines. These drivers can drive within their state now, but they can’t drive across state lines. So, these bills would allow them to do that with very strict safety measures and after completing a detailed Apprenticeship Program.

    But these bills, there’s one in the House and one in the Senate, they have bipartisan support. And hopefully, we can get those included in something.

    FMCSA also has a pilot program going on. They have one for former military drivers that’s actually in place. And they were - they are looking at developing one for other drivers in general. So, either legislatively or regulatorily we would like to see that go forward.

    And then just the ocean carrier issues. Yes. We’re following up with the committee on the June 15th Hearing. And would really - we’re really going to push some of these proposals that I just shared with you.

    Next slide.

    I think that’s all I have. So that’s - oh I would be happy to answer any questions that you may have.

Rick Gabrielson:    That’s great. Thanks, Jennifer. Questions from the members or public. And maybe while we’re waiting for people to key in, a quick question for you, Jennifer. When you talk about the incentives that you wanted to be able to provide from a visibility standpoint do - are your members able to quantify if they had that benefit? What is it worth to them in terms of either improved performance or being able to make other kinds of changes within the network? Is that something that your group would quantify if you had the capability?

Jennifer Gibson:    The - can you repeat that? For the incentives, we were thinking for the ocean carriers. So, they could provide data to our members. And then the other…

Rick Gabrielson:    Right.

Jennifer Gibson:    …incentive was to try to attract more workers into trucking and, you know, the port facilities and things like that.

Rick Gabrielson:    Yes. This is aimed at the ocean carrier. So, if the ocean carriers were able to provide that to your members, are your members able to quantify that and says, hey, it’s worth X to us if we had that information?

Jennifer Gibson:    Oh, that’s a good question. I don’t know that off the top of my head. But I can - we can ask our members about that and get back to you on that.

Rick Gabrielson:    Yes. I’d love to find out about that. And great, thank you. Questions from the group for Jennifer.

Richard Boll:    And we have to do star 1 if you want to ask a question.

Coordinator:    Yes. Just a reminder, if you would like to ask a question over the phone to press star 1. There is one question in the queue from Melzie Wilson. Your line is now open.

Melzie Wilson:    Hello, Jennifer. How are you today? This is Melzie Wilson representing the NCBFAA as well as I work for FedEx Trade Networks. You’re touching on something that I’m very passionate about and looking for some accountability from our representatives from the FMC, etcetera, and supporting the issues we have in our supply chain, both on the inbound and the outbound.

    I listened to the House Transportation Infrastructure Committee Hearing. And I was hearing the Hay Growers Association when they said that they are just about out-marketed because of the cost and delays. Now, Australia has taken over the market.

    Is the chemical industry seeing that as well? Is that you’re virtually because you’re here in the U.S. with either on an inbound or outbound, you’re being out-marketed throughout the world?

Jennifer Gibson:    Yes. And the industry as a whole, not so much. But the hardest hit is at specific products.

Melzie Wilson:    Right.

Jennifer Gibson:    And I don’t know (unintelligible)…

((Crosstalk))

Melzie Wilson:    Well.

Jennifer Gibson:     …right off the bat. But yes, it’s - yes. Kind of depends on the member’s product and how important it is to their particular operation and their customer base.

Melzie Wilson:    Right. My second is the outreach of partnership. It is something that we’re reaching out to a number of people in order to get I think the greater the number, the better off we are. So, if there’s an opportunity to partner with the NCBFAA, I can certainly bring in my Maritime Council representative for the association. In fact, there’s a meeting going on right now talking about this subject.

    But I certainly wanted to hear your presentation and the content of your presentation. So, I’ll be happy to reach out to you and provide that information.

Jennifer Gibson:    Oh, that would be great. I appreciate that. Thank you. Bring some members (over).

Rick Gabrielson:    Other questions.

Coordinator:    Yes. There is another one in the queue from Gene Seroka. Your line is now open.

Gene Seroka:    Yes. Hi, Jennifer, Gene Seroka, Port of Los Angeles. Thanks for the review and we feel your pain. I’d like to offer, as you talked about, a number of subjects to get with you and your organization offline and see how we can help your members. A number of those points have either been activated or in place, need a little bit of grassroots effort from membership like yours and others. So happy to go through these with you and in great detail if you have the time.

Jennifer Gibson:    Oh, absolutely. Yes, definitely. My contact information is up there on the screen, so, yes, please reach out. We’d love to do that.

Gene Seroka:    Fantastic. Thank you.

Jennifer Gibson:    Thank you.

Rick Gabrielson:    Thanks, Gene. Other questions.

Coordinator:    There’s a - yes. There is another question in the queue from Brandon Fried. Your line is now open.

Brandon Fried:    Thank you and thank you, Jennifer. This is Brandon Fried. I represent the air freight forwarders. And just to follow up on what my colleague, Melzie Wilson just talked about. The air freight forwarders, because we also ship a good amount of maritime cargo as well would be more than willing to work with you. We’re very concerned about the issues that you brought up as our customers. And I look forward to engaging with you after today.

Jennifer Gibson:    Great. Thank you.

Rick Gabrielson:    Other questions.

Coordinator:    Yes. Jim Cooper, your line is now open.

Jim Cooper:    Thank you. Hey, Jennifer. I don’t have a question. I just wanted to say hello. How are you doing?

Jennifer Gibson:    Good. Hi Jim. Haven’t seen you in ages.

Jim Cooper:     I know. I couldn’t pass up the opportunity. I’m sorry, people. I’ve known Jennifer for a long time. And any chance I get to say hi during these weird times, I’m going to jump in and do it. Anyways, I’ll give you a shout and we’ll catch up and…

Jennifer Gibson:    Sounds good.

Jim Cooper:    …talk a little more about all this stuff.

Jennifer Gibson:    Absolutely. Thanks, Jim.

Jim Cooper:    All right, talk soon.

Rick Gabrielson:    Thanks, Jim.

Jennifer Gibson:    Okay.

Rick Gabrielson:    Other questions.

Coordinator:     I’m showing, no further questions at this time.

Rick Gabrielson:    Great. Jennifer, I would agree. We feel your pain as well. Just what we hear in the industry. But thanks for your presentation. Thanks for the suggestions. I’m sure that a number of our groups and subcommittees can use parts of that and as we prepare some of our recommendations to the Secretary and group going forward. So, thank you so much.

Jennifer Gibson:    Well, Thank you. Thank you very much. And feel free to reach out to me at any time.

Rick Gabrielson:    Fantastic. Thank you much.

Richard Boll:    Hey Jennifer, this is - and Jennifer this is Rich Boll. Sounds like you’re the popular one today with all the contacts. So, hopefully things will work out and you guys can all get together and discuss the issues, exactly what the meetings are for. Thanks.

Jennifer Gibson:    Great. Well, thank you. Thanks again. Look forward to working with you.

Rick Gabrielson:    Thanks much. Thank you. Okay, our next speaker is Dennis Alvord with the Economic Development Administration. And he serves as EDAs Deputy Assistant Secretary for Economic Development and the Chief Operating Officer and is responsible for enterprise-wide operations and program execution. He’s now currently serving as EDA’s acting Assistant Secretary and concurrently performed the duties of the Assistant Secretary and the Deputy Assistant Secretaries of Economic Development and Regional Affairs from April of 2017 through March of 2019. So, welcome Dennis to the group. Dennis.

Richard Boll:    This is Rich. I think Dennis was going to be doing the call-in portion of it. I don’t think he’s going to show up on our screen, but I’m not sure.

Rick Gabrielson:    Okay.

Richard Boll:    Dennis. Let me see. I guess he’s not on as of now. Maybe it’s a little early for his presentation. Let’s see.

Eugene Alford:    We are learning a little bit ahead of time, so he may, you know, maybe he’s calling.

Rick Gabrielson:    Could be that is calling in in a bit. Do you want to jump and have Mike cover his piece now while we wait for him?

Richard Boll:    Sure.

Mike Steenhoek:    I could.

Richard Boll:    So, is Mike on?

Rick Gabrielson:    Mike, are you on?

Mike Steenhoek:    I am on. Can you hear me?

Rick Gabrielson:    We can.

Richard Boll:    Yes, Mike.

Rick Gabrielson:    You want to go through and talk about the supply issues that you experiencing in the Ag industry?

Mike Steenhoek:    Yes. I’d be happy to and…

Rick Gabrielson:    Thank you.

Mike Steenhoek:    …to everyone, it’s nice to visit with you. Look forward to the days of being back in person. So, hopefully that’ll happen sooner rather than later.

    What I’m just going to talk about and I want to just be mindful of time, but I’m going to be focusing more on the container issue and the supply chain that relies on that particular mode of transportation. For soybeans, the overwhelming majority of our exports occur via bulk. And certainly, we haven’t an overly subscribed supply chain right now. And so, bulk shipments, you know, are being impacted as well, whether it’s within the United States or on the journey to export markets.

    But a lot of attention has been generated about this whole container availability issue and including its impact on agricultural exports.

    And so I’m just going to talk, you know, not just about the soybean industry, but more broadly affecting agricultural exports. About less than - about 7% of U.S. soybean exports do occur via container. So, again, underscoring the point that we’re mostly a bulk transporter, but we do rely on containers. And it’s something that is growing.

    And you’re hearing customers more and more, particularly international, wanting to receive agricultural commodities, including soybeans via containers because of the quality preservation that that ensures, the - this desire for more of a localized supply chain, knowing where your products are actually generated and grown. You know, a lot of times it’s more compatible with their own operations. There’s a - there would be a preference among many of our customers to receive a handful of containers a week versus one large shipment a month. So, for a variety of reasons, there’s this growing desire to receive soybeans via containers.

    But a lot of our customers do rely on containers. So, you know, for example, the meat industry, pork, chicken. You know, when you grow soybeans, the primary reason you grow it is to ultimately feed the soybean meal produced from those soybeans to animals like the pork industry or the poultry industry.

    And so, we do have a prolific meat export industry in the United States. And so those industries do rely on shipping containers, particularly refrigerated containers, to be able to meet their international demand.

    And you cannot have a healthy soybean industry if you don’t also have concurrently a healthy meat industry. So, that’s something that we’re very sensitive to. When you hear the concerns and challenges being expressed by the pork industry, for example, there’s you can get much more of a favorable premium if you’re exporting meat products in a chilled fashion, in a refrigerated container versus frozen. And so, that’s obviously a concern.

    So just to - so to highlight the - kind of the state of play, at least as I see it, this is a very controversial issue. There’s a lot of opinions across the board. But this is just my perspective. I do routinely correspond with actual exporters via containers. And I ask three questions of them. And I’ve continued to do this.

    So, question number one, I’ll mention the three questions then I’ll go through each of them one by one. Question number one is is this a problem? And if so, add some flesh to it. Describe it a little bit further.

    Question number two is do you, exporter, have you identified anything that you would define as malicious, anti-competitive, or sinister behavior among any of the actors and participants in the industry? So, that’s question number two.

    Question number three is what is the best idea that you have either come up with yourself or you have heard that will meaningfully address the challenges confronting our supply chain, specifically as it applies to agriculture?

    So those are the three questions. So, question number one, the feedback that I have received is across the board this is a problem. I have yet to hear a positive adjective to describe the current situation. All of the adjectives are negative. Getting available containers is becoming more and more of a challenge. It’s having to, you know, challenge how people ship their products. It is - I have yet to hear someone say it is unique to the United States. So, our competitors in other countries are being challenged with the dilemma as well.

    But it is having certainly an impact on our industry. You know, it can be an issue simply of not being able to meet customer demand. It can also have an issue with your cash flow so if you’re not getting paid until the transaction actually occurs and so if you have soybeans that are just loaded into a container and waiting to be picked up, you’ve got inventory sitting there, but you’re not getting paid. So, there’s a - there’s certainly a cash flow stress as well.

    And so, it can be a container availability issue. Can also be a space on a vessel issue. Some of the more inherent challenges for commodity agriculture, and a number of other agricultural products that are more specific to our industry as in terms of shipping via containers is number one, we ship heavy product. And that’s a reason why we will always be a strong - bulk will be a strong element of our supply chain.

    When you look at containers coming into the United States that may have 10, 12, 14 metric tons per container, we send it. If it’s loaded with soybeans it can easily exceed 20 to 22 metric tons. So that certainly challenges, you know, the ability just to - you can’t simply return every empty container back to point of origin filled with soybeans and not have an impact on the weight of the actual vessel. So that certainly is a challenge.

    We have a challenge with agriculture is that when the container comes into the United States and it gets unloaded, those industries that are located in proximity to those hubs, they have an advantage where they can simply quickly load that container that’s now empty with some product to go back to point of origin. With agriculture, as we know, agriculture occurs where the conditions are appropriate for it. So,you can’t just simply locate yourself next to a rail terminal, for example.

    So oftentimes, if you want to ship a container full of soybeans or other agricultural products back to, let’s say, Asia, it’s going to require a trucking movement, often 100, 200 plus miles, to where the actual soybeans are grown. It’s loaded. It goes back to the rail terminal and then back on its journey back to Asia.

    There’s also the challenge with - on the return journey. Most of our soybeans are exported to China. And that’s - but most of that is in a bulk fashion. We do export some containers to China.

    But if you’re loading soybeans via container, the most likely destination will be a place like Taiwan, Indonesia, Vietnam, etcetera. And so, there’s kind of a delay going back to China where the containers want to go.

    And that’s something I always try to keep in mind and stress when I’m doing an interview or I’m talking publicly about this is that whether we like it or not, the containers want to go back to China. And that’s always important to keep in mind. Certainly, that’s reflected in the cost of shipping containers from China to the West Coast. It may have been mentioned, you know, current spot rate is $6,588 to go from China to the West Coast of the United States. To go from the West Coast back to China, $1,107, so 6 times the value of coming over here versus going back there.

    So, that’s some of the challenges that we have. With soybeans, fortunately, and a number of other grains, if you dry it down, there’s less of a susceptibility to spoilage. But certainly, if you’re growing fresh fruits, if you, you know, again, our friends in the meat industry, spoilage is a real challenge. And so that’s a real concern that they have. And so certainly it needs to be, you know, amplified. But the - it certainly is a problem. So, that’s question number one.

    Question number two, do you know - have you identified anything malicious by any of the actors in the supply chain?

    And I don’t frankly find many answers to that question. I mean, the overwhelming consensus is that we have a significant supply/demand imbalance when it comes to our supply chain. It’s overly subscribed. It is under stress. And there - it’s just, frankly, a very unique situation.

    Now, I do hear some comments about the whole, you know, detention and demurrage issue. And, you know, some have argued for greater regulation and advocacy among the federal government on that. You know, our contention is that certainly if there are bad actors, if that is being abused there - that needs to be attended to by the Federal Maritime Commission if it’s not resolved to the satisfaction of both the shipper and the carrier. That - but that’s really the extent of it. Again, it keeps coming back to we have - we’re in a very unique situation right now.

    So, and I personally have always been very reluctant whether it’s on this issue or other issues to gravitate to a regulatory solution to some of these challenges, particularly if it’s more to simply market-driven. Because I always try to keep, and this kind of goes back to my experience working on Capitol Hill. I try to keep the balloon metaphor in mind that, you know, oftentimes when you impose a regulatory solution, it’s like squeezing a balloon where you might see pressure mitigated in one area, but then all of a sudden it expands in another area.

    And all of a sudden the unintended consequence of that regulation is all of a sudden you’re experiencing more hardship further down the road or something you never anticipated in the first place. So, I think that’s always really important to keep in mind.

    As far as this question number three, what are the best ideas that people have either come up with themselves or have heard that would address the solution?

    And frankly, the comments that I’ve received. Again, these are among the most knowledgeable people in the Ag export space. There’s not a lot of really eureka kind of comments that I’m hearing you. You’ll hear things like we need to have more round-the-clock, 24/7 operations at our ports. Now, I’m certainly open to those kinds of, and many others in the agricultural space are open to those kinds of things. I, personally, I represent soybean farmers who every year during planting and harvest season, there - it’s a 24/7 operation. When the work demands it they do it. So, that’s who I represent. So, I’m very open to that kind of - if that’s the solution.

    But one of the exporters I visited with mentioned to me and I concur with that if that’s the remedy, then the assumption is the ports are the only place where there is a under stress supply chain.

     And the reality is, as most of us know, is when you look at every link in the supply chain, there are challenges. And so simply, if you’re able to alleviate some of the pressure at point one, you might just all of a sudden experience pressure at point number two.

    And so that’s the concern that I have. Again, that’s something that we would be open to. But I don’t know if that’s really the elixir that some people say. If that’s - you know, people are certainly welcome to correct me if I’m mistaken. But I look at every - from trucking to rail to, you know, containers to the ports. You’re seeing profound evidence of stress throughout the whole supply chain.

    So, that’s kind of my - I’ll keep my comments to that in the interest of time. Certainly, if there’s any questions that any of you have, I’d be happy to entertain them. Thank you, Mr. Chairman.

Rick Gabrielson:    Thank you much, Mike. Questions or comments from the group. Again, hit star 1 if you would, please, if you’ve got some thoughts or comments.

    Mike, I would share with you that, you know, from my perspective as a ex-shipper and what I see in the market it’s - there are many facets to the issues or the stress that you mentioned, you know, from container availability to space availability on vessels, the demand, shippers trying to rebuild inventory as fast as they can. In some cases, they’re trying to get ahead of it because they’ve recognized how slow things are. Exports, you know, being of this country is a challenge in a lot of different sectors. We heard, you know, earlier, you know, with Jennifer and her group are experiencing.

    So I do think, you know, that there is an opportunity to at least take a look at, you know, some of these things that we as an industry may be able to do, you know, without necessarily over-regulation. I hear your point there.

    And, you know, I don’t think there’s any little short-term solutions to it. But these things hopefully, is not as bad as what we’re experiencing now are cyclical. And there are things, I think, that we need to do as an industry to begin to address those things.

    Questions for Mike.

Richard Boll:    Jeff are there any questions? Any other questions you see, Jeff. Jeff, are you there?

Coordinator:    Yes. You have a question from Libby Ogard. Your line is open.

Libby Ogard:    Yes. This is Libby Ogard. And I think that one of the solutions to improving this problem is greater visibility between all partners. And I think that’s a theme that we’re hearing and it’s echoing and resonating that we’re in a situation that shippers need to know where their product is and when can they expect it. We also need to be able to understand what’s moving. so the communication between what containers are moving on what trains, what chassis are available, and how we can match up those orders to get the most critical or the hot boxes out so that they don’t end up sitting at a warehouse off terminal supporting a container that may not be unloaded for five to ten days.

    So, I think understanding that information chain and making sure that we have visibility of these shipments I think will improve the efficiency and the cost effectiveness of our containerized supply chain.

Mike Steenhoek:    Well, yes. Thanks Libby.

Rick Gabrielson:    Libby this is Rick. Go ahead.

Mike Steenhoek:    Yes, thanks for the…

Rick Gabrielson:    Go ahead Mike, go ahead.

Mike Steenhoek:    …comment and I agree with that. And, you know, I’ve heard those kind of statements from exporters that, you know, particularly and this can apply on the detention and demurrage issue where you have this expectation that you need to have, either pick up the box or you need to drop off the box on a particular day. And then all - and you’ve orchestrated your own operations to accommodate that. And then all of a sudden you get a late minute course correction or amendment from, say, the carrier. And then all of a sudden you’re in a real dilemma. And you may have to pay a fee associated with that.

    Now, I think this is something that we need to do a deep dive into to really understand what’s the culprit behind this. If there’s something clearly that’s systemic where communication lines are just unworkable, unwieldy, inefficient, if that can be identified, then, by all means, we need to try to take corrective action on that.

    But a lot of times it may be the carrier all of a sudden found out 15 minutes before that they’ve got a problem. They may have to divert somewhere or there may be, you know, some kind of wrench thrown in their operations. And all of a sudden they’re passing that along, you know, 30 minutes later to their affected customers. And if that’s the case, you know, then, you know, that’s, you know, something that’s just, hopefully, is more short-lived.

    So, I mean, clearly, that’s something that needs to be - I agree. There needs to be a deeper dive into. But really understanding what’s the cause of this.

Rick Gabrielson:    Yes. I was going to share Libby’s comments and thought. Visibility is probably the number one issue that I hear, whether you’re an exporter, whether you’re an importer, and even the mode that you’re bringing it in all the way through the supply chain. It’s one of the biggest challenges that are out there.

    I’ve got some thoughts, Mike, that I can share with you offline that - in terms of some things within the industry that we have talked about before, I think, on - as a group and on the calls and stuff that might be beneficial for you longer term.

Mike Steenhoek:    Sounds good.

Rick Gabrielson:    Okay. Other questions.

Coordinator:    Yes. We have a question from Jim Newsome. Your line is open.

Jim Newsome:    Thank you. Mike, I thought that was a very - I run the South Carolina Ports Authority in Charleston. And we actually have a soybean transload facility on our terminal. I think your points are spot on. I think it’s very realistic. I don’t - and several things I’d say. I don’t think that what we’re experiencing today is amenable to a regulatory solution. I really don’t. I think it’s far beyond that.

    And while I know we’re - I don’t think this current boom situation lasts forever. I think there’s certain fundamental things in the industry that have changed that we need to recognize. And number one, the container shipping industry has changed. There are less carriers. They have a bit more ability to match capacity with demand. And I don’t see that changing.

    And there’s not a lot of infrastructure investment in the international supply chain in this country. I mean, there are not many new port terminals being built. We’ve got a real crisis in container trucking. It’s not an attractive industry. There’s several reasons for that. We need to work on making that business more attractive. We’ve got impediments to upgrading chassis fleets because frankly, a lot of the (chatter by and before) made in China, that door is not open today.

    You know, so I think that this isn’t a temporary thing. And we’ve got our work cut out for us to come back. I mean, this was an article yesterday. Needs another 300 million square feet of e-Commerce distribution facilities in this country because there’s underinvestment in that.

    So we’ve got our work cut out for us. So, I don’t believe, and maybe Gene agrees and maybe he doesn’t or Rick. But I think this is not just a temporary situation. It’s a bit of a new normal, in my opinion. So, I appreciate your realistic outlook.

Mike Steenhoek:    Well, yes, thank you, Jim. And, you know, one of the, you know, the questions I’ve asked exporters is, hey, I know no one has a perfect crystal ball. But what does your crystal ball say as far as how long this is going to last?

    And clearly, we’re into back to school. We’ll soon be upon the holiday season where that naturally occurs. But it really, as many of us know, it’s really challenging the paradigm of supply chains overall and where it used to be, you know, just in time delivery. And the more you can minimize your inventory levels, the better.

    And there’s very sound economic rationale behind that. But that - and that would be optimal if we lived in a perfect world and didn’t have these external and seismic shocks that we’ve experienced this last year.

    So as a result, we need to do things where all of a sudden padding, adding pad and absorption and shock absorbers into your supply chain, that all of a sudden is becoming more of a metric that we need to prioritize all the more.

    So, you’re seeing a lot more, even when the Christmas season is behind us, wanting to, you know, replenish inventory levels because they don’t want to get caught in this again.

    And so, I think there’s a lot. And it’s just going to be - we’re going to have a much different conversation, whereas in the past it, again, was just driven on get things from point A to point B in the most expeditious, cost-effective way and without as much regard for external pressures and seismic events that we’ve seen. And obviously, we need to incorporate that more.

Jim Newsome:    A lot of fingers burned in the last year on just-in-time strategies. That’s for sure.

Shari Diaz:    Absolutely.

Rick Gabrielson:    Yes, we did. Yes. I could tell you a lot of shippers that I talk to are moving away from that strategy.

Shari Diaz:    I will tell you. This is Share Diaz with IBM. And I will tell you we’re hearing that in spades.

    And actually I read a headline that said, Just in Time or Just in Case, right. And I think the onshoring strategies, the, you know, diversifying the supply base. There’s a lot of things happening that are really indicating that the shocks of this past year have really taught us a lot. And things are going to change. We’re never going to go all the way back to what we used to think was normal.

Rick Gabrielson:    Agreed.

Mike Steenhoek:    Well, and I also look at it as there used to be this kind of discussion with - just within isolated to the port industry.

    And the discussion - and the accusation would go something like this. Why do we need so many ports in the State of Florida? Could we only have two or three? Why do we need to have Savannah and Charleston? You know, there’d be these kind of comments that were made.

    Well, if you want to look at it just through the exclusive lens of we just need to move X amount of freight from point A to point B as quickly as possible with the least amount of investment publicly or locally, maybe there would be some rationale for that.

    But we live on the planet Earth. And there are things like redundancy and resiliency and being able to absorb shocks that, you know, I thought over and over again when you have these kind of events, whether it’s weather-induced or whether it’s something like we’ve had with COVID-19. Thank goodness we’ve got the Port of Oakland. Thank goodness we have Charleston and Savannah and you’ve got all these ports in Florida, etcetera, etcetera, etcetera.

    So I think that kind of mindset, you know, obviously, I’m just mentioning ports, but throughout every link in the supply chain, I think we’re going to be thinking about that, things - adopting more of that thinking moving forward.

Rick Gabrielson:    Good point. Agreed. Any last question for Mike before we move on?

Coordinator:    I’m showing no further questions.

Rick Gabrielson:    Great. Thank you. Thanks, Mike, great conversation.

Mike Steenhoek:    Thank you.

Rick Gabrielson:    Is Dennis with us?

Richard Boll:    Dennis, are you on?

Dennis Alvord:    I am. Good afternoon.

Richard Boll:    Okay, Dennis. Okay. Dennis.

Rick Gabrielson:    Go ahead Dennis It’s over to you.

Dennis Alvord:    Can you hear me? Okay, great. Thank you.

Rick Gabrielson:    Yes.

Dennis Alvord:    Well, thanks for having me, again, back to the committee. It’s a pleasure to be back with you today. I have some prepared remarks for you all. I hope will be thought-provoking and provocative, but certainly, hope that we would have some time for some discussion and Q&A at the end as well.

    So, thanks again to our friends and colleagues at the International Trade Administration for the invitation and hosting us here today.

    So, I’d like to talk to you a little bit about EDAs, post-pandemic economic development priorities, and our work related to supply chain.

    So, as you all know, Executive Order 14-017, which was signed by President Biden in February directs a whole of government approach to assessing vulnerabilities and in strengthening the resilience of critical supply chains. At the Economic Development Administration, or EDA, we’re working closely with our sister agencies at the Department of Commerce to analyze what we have done and what we need to do to stabilize our supply chain.

    We’re using all of our data capabilities to assist in this analysis. Specifically, within EDA, we utilize our Cluster Mapping Tool as an example to provide an in-depth analysis for where in America we have strategic capabilities, industry clusters to enhance supply chain on a - related to regional economic ecosystems. The historic levels of funding available to help our communities recover from and build back stronger in the wake of the coronavirus pandemic, I am pleased to provide you with an update on EDA’s programs available to support supply chain infrastructure development.

     We look forward to continuing our collaboration across the department to boost U.S. export growth, foster national economic and competitiveness, and improve U.S. supply chain competitiveness in the domestic and global economy.

    While I know that many of you have worked closely with the EDA, some of you may not be familiar with our role. So, I’ll begin today with a brief overview of our mission and work and then I’ll fill you in on how we’re working to support our communities as they recover from the pandemic to build a stronger and more resilient future.

    As the only federal government agency with economic development as its sole exclusive mission, EDA is available to help implement locally-driven strategies designed to improve our communities and create new jobs. EDA provides strategic investments through competitive grants that foster job creation and attract private investment to support development in economically distressed areas of the United States.

    We understand that communities are at different points on their economic development journey. Some need help developing a plan and figuring out where to start their economic development efforts. Others need critical infrastructure to support business expansion. And still, others need help building ecosystems to help translate innovation into jobs.

    EDA, therefore, makes investments to catalyze local government planning, technical assistance, and infrastructure implementation strategies designed to spur economic development. I’d like to emphasize that EDA does not go into communities advocating a Washington knows best approach. We also don’t invest directly in businesses. Rather we support impactful, well thought out, locally devised strategies designed to create conditions that make it easier for businesses to start and grow.

    We’re a force multiplier. So, our grants for the most part require local participation and local matching funds. Our investment priorities provide an overarching framework to ensure that our grant investment portfolio ranging from planning to infrastructure construction contributes to local efforts to build, improve, or better leverage economic assets that allow businesses to succeed and regional economies to prosper and become more resilient.

    Competitive grant applications for EDA funding are responsive to the evaluation criteria listed under each individual funding announcement and must include at least one of our investment priorities. Our investment priorities were recently updated on April 14th. And our top investment priority is equity, which speaks to our continued (unintelligible) working closely with our nation’s underserved populations and communities. Working with these populations and communities has been our mission since President Johnson signed the Public Works and Economic Development Act.

Richard Boll:    Did we just lose him?

Rick Gabrielson:    Yes. I was just going to say. Dennis, are you there?

Richard Boll:    Mr. Alvord. Oh no.

Rick Gabrielson:    Let’s see if he jumps back on here.

Richard Boll:    Yes. Just see if he can get back on here.

Rick Gabrielson:    Yes. He was like midsentence and just dropped, I think.

    Jeff, is he - can you tell us if he’s trying to get back in?

Richard Boll:    Yes. I’m trying to send him a note.

Coordinator:    I’m trying to get him reconnected here.

Richard Boll:    I’m going to love it when we get back to face-to-face meetings.

Rick Gabrielson:    Yes. I was just going to echo that same comment.

Richard Boll:    You know, we got all the right speakers and just the technology sometimes just doesn’t quite do it.

Rick Gabrielson:    Give it a minute here and see what happens rather than jumping into other things.

Richard Boll:    That’s fine. And we already know Shari’s on so.

Rick Gabrielson:    Yes.

Richard Boll:    Let’s give him a little more time. You know, he’s calling back now. I don’t know if you can keep an eye on him Jeff or (unintelligible).

((Crosstalk))

Dennis Alvord:    Hi. Apologies. This is Dennis. Can you hear me now?

Rick Gabrielson:    Yes, great.

Richard Boll:    Oh, yes, Dennis. Sorry, you got disconnected there.

Dennis Alvord:    Yes. I’m not sure. I’m not sure quite what happened. So, I believe I was starting to talk about investment priorities. Is that about where I was disconnected?

Richard Boll:    Yes. I think…

Rick Gabrielson:    Yes.

Dennis Alvord:    Okay.

Richard Boll:     …that’s exactly where you were.

Dennis Alvord:    Perfect. Well, let me pick up with that thread then. So, because we recently, very recently actually, went through a process of updating our investment priorities, which we periodically do. They were most recently updated on April 14th.

    And our top investment priority now is equity, which speaks to EDA’s commitment to working closely with the nation’s most economically distressed, underserved populations and communities.

    And working with these populations and communities has been part of our core mission since President Johnson signed the Public Works and Economic Development Act authorizing the creation of EDA in 1965.

    So, understanding that innovation is the backbone of our economy and we must invest to grow the businesses of the future, including those that address climate change, EDA has added - also added an investment priority related to technology-based economic development and environmentally sustainable development as new priorities.

    And another area where EDA has supported extensive investment over the last several years is our commitment to supporting coal and power plant communities, along with other types of community economic investments when needed. And this is specifically addressed under the rubric of our recovery and resiliency priority.

    In terms of our other priorities, our commitment to supporting strategies that advance workforce development, manufacturing, exports, and foreign direct investment strategies, which remain unwavering. All of these priorities help to play a role in strengthening America’s supply chain.

    So, to support our communities across the continuum of economic development EDA’s core Public Works and Economic Adjustment Assistance, or PWEAA Programs provide economically distressed communities and regions with comprehensive and flexible resources to address a wide variety of different economic development needs.

    Through our PWEAA Notice of Funding Opportunity EDA solicits applications to provide investments that support construction, non-construction, planning, technical assistance, and Revolving Loan Fund Projects under EDA’s Public Works and Economic Adjustment Assistance Programs. Projects funded by these programs support the mission of the Department of Commerce by, among other things, leading to the creation and retention of jobs and increased private investment, advancing innovation, enhancing manufacturing capacity of regions, providing workforce development opportunities, and growing ecosystems to boost exports and attract foreign direct investment.

    There are no submission deadlines until this funding opportunity. Applications are expected on an ongoing basis, either until we publish a new Notice of Funding Opportunity or we cancel the existing one or we’ve expended all the available appropriations.

    So, our program budget. EDA’s program budget has historically hovered around $300 million. However, recent funding provided by Congress, including through disaster supplemental appropriations, the CARES Act, and most recently the American Rescue Plan Act has resulted in EDA’s budget expanding significantly. In Fiscal Years 2018 and 2019 EDA received a total of $1.2 billion in supplemental disaster appropriations from Congress to help regions recover from economic harm and distress resulting from natural disasters occurring in the period from 2017 through 2019.

    Under the CARES Act in 2020, EDA was provided with $1.5 billion to help our communities prevent, prepare for, and respond to coronavirus and the economic impacts of the pandemic. As provided by Congress to offer maximum flexibility and to be as responsive to economic development needs and priorities of our local and regional stakeholders as possible we administer the CARES Act and Disaster Assistance Grants under the authority of our Flexible Economic Adjustment Assistance Program.

    In 2020, we started our CARES Act implementation by awarding a significant number of awards to long-standing, high-performing institutional economic development partners to increase capacity to support rapid economic recovery response. This included economic development districts and planning, tribal planning partners whom we provided funding aid to support recovery planning and coordination. EDA University Centers were provided with CARES Act funding to harness the resources of academia and support recovery assistance targeted at businesses and the Economic Development Practitioner Community. And our revolving loan fund operators were - received extensive supplemental appropriation to address the immediate capital liquidity needs of small businesses.

    So, now we’re moving into a second phase of implementation. And today we’re actively evaluating competitive CARES Act proposals and making competitive awards to support a wide range of non-construction and construction activities, including economic recovery planning and technical assistance strategies to address economic dislocation caused by the pandemic, preparing or updating economic resiliency plans to aid recovery and support industry diversification, capitalizing new revolving loan funds to enhance funding liquidity for hard-hit business enterprises, and constructing public works and facilities that will support economic recovery, including deployment of broadband to support telehealth and remote learning for job skills, among numerous other high impact infrastructure construction investments.

    Under CARES, we’ve made critical investments to support locally developed strategies and improve supply chains. For example, in April, EDA invested $3 million, matched by more than $815,000 in local investment in the Port of Port Arthur Navigation District in Port Arthur, Texas. This EDA grant is supporting the construction of a new general-purpose cargo handling, staging, and transport area to serve one of the port’s first.

    The new infrastructure will address sensitive supply chain movement of materials such as (health used) materials, and human relief, military, and energy cargo supplies. Movement of these products has been impacted by the pandemic. The project will directly address the recovery and resiliency of the supply chain, which will help the port remain globally competitive and enhance the capability for U.S. exports.

    Once completed, the project will spur job creation, attract private investment, and advance economic resiliency throughout the region. The port estimates that this particular investment will help create 220 jobs, save 55 jobs, and leverage over $44 million in private investment.

    As another example of how EDA’s CARES Act grants are helping to rebuild our supply chain, EDA invested more than $8.3 million in the City of Tracy, California, in April, to help expand, replace and expand a vital bridge used for commerce. The project was matched by more than $2 million in local investment. Once completed, the project will enhance the efficiency of freight movement of existing companies to help the region recover from the pandemic, create and retain jobs, attract private investment, and advance economic resiliency throughout the region.

    Under CARES, we also implemented a pandemic-specific innovation and entrepreneurship challenge. Our grantees under our Office of Innovation and Entrepreneurship’s FY 2020 Scaling Pandemic Resilience Through Innovation and Technology, or SPRINT Challenge, were announced in early April.

    As one example in Shelby, Tennessee, a $750,000 SPRINT Project matched by $190,000 in local investment, is supporting the Resilience AgriFood Innovation Network, or RAIN Program, which is focused on scaling technology-based pandemic response in the AgriFood Supply Chain. While we will continue to make CARES Act awards to eligible entities until available funds are exhausted, we have received many more applications than we can fund at this time. We’ve currently awarded over 80% of our CARES Act appropriation. And we’re continuing that work.

    Importantly, however, we are positioned to continue to assist our communities and strengthen our supply chain through funding received under the American Rescue Plan Act, or ARP Act. Under President Biden’s American Rescue Plan, EDA was allocated nearly unprecedented $3 billion in supplemental funding to assist communities nationwide in their efforts to build back better by accelerating economic recovery from the pandemic and building local economies that will be resilient to future economic shocks.

    Only one time in EDA’s 56-year history have we received the largest supplemental than the appropriation under ARP. So, it represents a truly transformative opportunity.

    Today, we’re in the process of developing the program implementation guidelines needed to equitably move this funding forward. With this historic funding, we’ll be taking innovative new approaches to ensure that our investments have the greatest economic impact.

    Again, while this program is still under development, I can share with you that our execution will focus on bringing back the American workforce in industries that have been hardest hit, such as travel and tourism, and manufacturing, to programs that support economic growth and diversification, creating talent pipelines to those industry needs, and fostering higher skill, higher-wage job opportunities for all. Capitalizing on American ingenuity to build (region of the) future by focusing on innovation-led development, including planning, infrastructure, workforce development, and business financing. And pursuing a comprehensive approach to advancing equity by focusing on populations in underserved communities that have been denied a full opportunity to participate in all aspects of economic prosperity.

    Our American Rescue Plan Act funding opportunities will be announced in the near future. So, I certainly encourage everyone to keep an eye on eda.gov and our social media channels for news on the status of the implementation of these vital funds.

    To close, EDA is committed to supporting projects that will ensure the strength of our critical supply chains. From workforce to infrastructure to innovation to equity, EDA programs are helping America build back better. I thank you for your attention today and I’d be happy to answer any questions you might have.

Rick Gabrielson:    Thank you, Dennis. Appreciate it. Questions for Dennis from the group. Again, star 1 if you have a question.

    Jeff, is there anybody in queue?

Coordinator:    I’m showing no questions.

Rick Gabrielson:    Okay. Give it just a second here for anybody. Okay, Dennis, thanks so much for your presentation and your comments. I appreciate it. Team appreciates it. And I think we’ve got your email address. So, if anyone has a question afterwards, maybe they can follow up with you directly.

Dennis Alvord:    Absolutely. And again, I would refer anyone would like to reach out to EDA to get more details, there’s extensive contact information on our web site at eda.gov. Thanks for having me.

Rick Gabrielson:    Fantastic. Appreciate it. Thank you, Dennis. Okay, next, Shari and her colleague, Godul, are going to share an update on blockchain. Shari.

Shari Diaz:    Hello Rick. Hello everyone. This is Shari Diaz with IBM and Godul Kandiraju is joining me. He’s our - he’s the brain trust, you all, on the technology of blockchain and the way it’s being applied in the supply chain industry.

    So, Godul, if you want to say hello and test your mic.

Godul Kandiraju:    Hi everyone. Can you hear me?

Shari Diaz:    Yes.

Rick Gabrielson:    We can. Yes.

Godul Kandiraju:    Awesome.

Richard Boll:    Yes.

Shari Diaz:    Okay. And am I able to share my screen?

Richard Boll:    No. Looks like Eugene has it up.

Shari Diaz:    Okay. All right, Eugene, great. Thank you. Okay. So, we wanted to just take a few minutes. We know blockchain is - it’s a topic that enters and comes and goes in our conversation. So just, you know, a broad update about blockchain technology and uses in the supply chain industry.

    So, if you want to go ahead. I’ll go first and then I’ll turn it over to Gokul to give us a little bit more specifics around what we’re doing with the FDA.

    But when you look at, you know, who - what is happening with blockchain in the supply chain industry. First of all, geographically, because I know we’re always interested in what’s happening around the world and, you know, comparing that with what’s happening in North America. You know, what you see here is both the current market share as well as the expected growth rate, right, the Compound Annual Growth Rate or CAGR.

    So North America, Europe, and APEC are leading. The growth is, you know, going to be driven more out of APEC in the next - and this study is between 2020 and 2026 is the horizon. So, it’s going to grow a lot. You know, if you look at the headline there, $253 million right now to 3.2, right. So, that’s $3.2 billion by 2026. So, you know, blockchain has hit its stride as a technology specifically in supply chain use cases.

    And these numbers don’t include, you know, cryptocurrency. They don’t include financial services. I will say the source on this is a reporting firm called MarketsandMarkets. They do tend to be a little optimistic at times. But it gives you directionally, you know, some expectations to gauge, you know, what everybody is predicting and thinking is going to happen.

    So, you could see geographically on the left. On the right-hand side, you’re starting to see what’s driving it and hampering it and where the opportunities and challenges are. So, you know, and this report that was published, you know, had entire sections on COVID and the COVID impacts that we were just talking about in terms of bringing, you know, the criticality of an effective and efficient supply chain to the forefront.

    So that’s what a lot of the drivers are is, you know, we’re getting used to the technology. Like I said, we’re hitting our stride. Transparency is paramount. You can’t manage what you can’t see if you don’t have visibility to it.

    And if you and your partners and your ecosystem have visibility to it, you can make better decisions faster.

    And then the security, right. We’re all hearing about security breaches. And blockchain is a very secure technology. It’s built for that purpose to share data among enterprises in a very, very secure way.

    So, the restraints are just, you know, nobody knows what all the regulatory agencies around the world are going to do and what kind of standards are going to come out. So, quite honestly, the sooner we can decide some things, the faster we can go. And I think we all recognize that.

    We want to grow automation and collaboration. And more and more governments are investing. You’re seeing that in some headlines around the world, more so than in the U.S. But definitely, there is good investment coming out of the public sector.

    And then the challenges, they’re going to call out what happened with COVID. They’re going to say we can’t see our supply chains and we’ve got tons of data. And we’ve got to, you know, keep making sense of that. So that all makes sense. I don’t expect that’s too much of a surprise.

    But let’s keep going and then I’ll pause before I hand over to Gokul for any questions on what I cover.

    One thing I do want to specifically call out is, you know, why are people investing in blockchain. What are they hoping to get out of it?

    So, reduction in infrastructure costs. Now, that might be a surprise because blockchain has the reputation of being expensive. But I will tell you again, hitting our stride. I can tell you what’s going on in my company in terms of our prices and how much easier it is now to get on board.

    So, if you haven’t. If you’ve looked in the past, and you haven’t looked lately, there definitely been some changes. People are looking to adopt blockchain to save money over what they’re currently doing.

    Improvements in business functioning. These are things like keeping counterfeit out of the supply chain. That’s really big in manufacturing, especially in aerospace. You know, even in retail. Making sure that, you know, folks aren’t - making sure your Louis Vuitton is really a Louis Vuitton, those kinds of things.

    But sustainability is the one I really specifically wanted to call out here, because if you think about what we’re using blockchain for, which is tracing of products from its origin, you know, to its destination all the way through the multiple tiers of the supply chain, we can collect not only, you know, the information we’ve been collecting today to do a trade, but we can start to collect sustainability data like, you know, responsible sourcing, making sure that there’s no forced labor, making sure that the working conditions are good, those kinds of things, (unintelligible) resource consumption. You know, how - in your manufacturing processes, how are you consuming resources, and are you avoiding waste? Are you taking any byproducts back into the supply chain?

    And then lastly, and probably the one that’s getting the most attention at this moment, in at least my circle, is the carbon footprint, right. What is the carbon emissions? What decision making is each firm who’s in those tiers of the supply chain, you know, how are their decisions impacting the overall carbon footprint of the end product?

    And there’s a lot of development, a lot of investment in pilot programs around those kinds of things right now for us.

    And then, of course, increasing productivity and efficiency. Again, that goes to better visibility into the lower tiers, being able to plan better, avoid disruptions and mitigate risks.

    So, the view on the right there is just kind of that’s a food trust screenshot, that’s say, you know, from the farm to the manufacturer to the processor, to the warehouse, to the distributor, to the store, right.

    So, you know, that’s just a very typical view of a trace that says, you know, this package of mixed vegetables. And here’s where it came from. You can collect a whole lot of data through there, right.

    And blockchain is, you know, the other thing about sustainability data is the need to be very careful with who sees what. I will tell you that’s one of the number one concerns with any of our IBM customers that are participating in pilots is they want to do this, right, but they want to be very sure about who’s going to be able to see what data.

    So, again, that’s what blockchain is built for.

    So, okay, let’s keep going. Again, more data by industry this time very specifically. So, manufacturing is a big one. Always looking at what’s going on there. And called out on numerous earlier discussion, logistics and supply chain management is a manufacturing industry. Knowing where my stuff is, right, is the number one use case in manufacturing. And it is set to grow at the fastest rate between ‘20 and 2025.

    But I, I do want to draw your attention to the right-hand side. And Mike, and the conversation we just had around, you know, soybeans and containers. Blockchain in food and agriculture, and the expectation for investment there dwarfs manufacturing. Absolutely dwarfs manufacturing. Look at the scale on, you know, the X-axis there. It’s 250 on the left and 600 on the right.

    So, it - again, manufacturing is going to grow faster over the next few years. But food and Ag is going to continue to lead the way. And, you know, that is just a massive industry with so much complexity, so many big players and so many really small players. So, it’s a very dynamic and a complex space.

    But that is an industry that is recognizing how coming together is really going to help overall.

    So, on the right-hand side, you see the leading use case is traceability, tracking, and visibility. So it is, I will say, a little frustrating. These two figures come from two different reports because there’s a report on manufacturing and there’s a report food and Ag. And they don’t necessarily use the exact same use cases. But you can draw the parallels there, right. It’s really about visibility. Where did it come from? All through the chain and how did it get here and can I see it and track it the whole way, right.

    And then in the different industries, you go into some different use cases. But more optimization in food and Ag, more payments and settlements, and smart contracts, which is going to be process automation, if you will, on the right.

    Now, I think I have one more slide. Yes. So, this is a lesser-known application that IBM had worked with us. It was Sucafina as our business partner at the time. But Farmer Connect is now its own incorporated enterprise.

    And if you guys have your smartphone, scan that QR codes, right, because one value proposition that kind of gets a little bit lost but is really gaining traction is consumer loyalty, right, so particularly with coffee. You know, Sucafina at the time was trying to ensure that farmers in, you know, in some of the South American and other countries would continue to grow coffee. They weren’t making enough money to stay in the business and they were starting to turn over the land to grow other crops, right.

    And that’s - it’s a sad statement because it really speaks to the fact that they were not, you know, getting what they really should be earning as a wage for their work, because we all know we pay a lot for a cup of coffee in this country.

    So, you know, this brought visibility to that. So, Farmer Connect really, when you scan the QR code on the product in a grocery store, it takes you all the way back to the farm and you can trace the path even on a map, right, of where it went, you know, when it was harvested, how it was processed, and how it got to that store shelf.

    So, they’re not doing this to - you know, for - maybe for counterfeit purposes. They don’t want anybody else to put their label on. But this is really driving brand loyalty. And consumers of, you know, especially the higher-end brands are paying more to have this visibility.

    And then I will tell you, the Thank My Farmer App where that QR code takes you is really, again, back to the theme of sustainability. They are driving consumers to come to the App. You can tip the farmer that grew the coffee and you can contribute to other sustainability projects in the region.

    So, it’s a great story and it broadens, I think, the perspective on blockchain and all of the value drivers that are available when you bring this kind of information and this kind of ecosystem energy together.

    So, I don’t have a slide on this. But just because of the prior conversation around shipping containers, I do want to give you a brief update on TradeLens, which is, as you know, the blockchain solution built to track containerized shipping. And there’s a press release today that I will draw your attention to that Hapag-Lloyd and Ocean Network Express have completed their integration to the TradeLens platform, which brings now five of the six, or I think they are number six and seven. Forgive me for not having better detail. Ocean carriers onto the platform.

    So, there’s, you know, there is - you know, we’re certainly not the only blockchain solution out there and the only containerized freight visibility solution. But it is gaining speed. It is gaining some traction. They’ve gone through some restructuring which they needed. And again, that’s another. I know we had the TradeLens folks come and do a presentation for the committee. Be happy to have them come back and give a fuller update if folks are interested.

    With that, though, I will pause for any questions before I ask my colleague Godul to talk more about the technology and maybe answer any technology questions and into our FDA use case.

Rick Gabrielson:    Questions for Shari. We are limited on time, Shari, as well. So, I’m not sure how much more you’ve got left.

Shari Diaz:    Okay. Well, Godul let’s hand it over to you unless - but folks do speak up if there’s questions.

Rick Gabrielson:    Okay.

Godul Kandiraju:    Okay. Thanks. Thanks, Shari. So, if you could go to the next slide here, so I’ll just talk a little about, you know, after the wonderful introduction, about a little bit about how, right.

    So, again, I’ll spend maybe one or two minutes on just refreshing the fundamentals of blockchain, and then we can go a little deeper into how we are accomplishing what we’re doing, such as tracing the origin of food and so on, and then particularly talking about the FDA use case that we are working on.

    So, the main problem with, you know, this - with scenarios where there are many participants, right. Even think of a very simple scenario, buying a home. We have to go. We have to interact on one hand with the buy. On other hand, with attorneys and the realtor, and then the credit scores. 

    So, there’s multiple parties that are interacting with each other and individually, every party is doing so-called transactions with others, right. And that leads to inefficiency, right. It’s more time, more cost. And it’s also vulnerable because there is no single source of truth, right. Everybody has data potentially duplicated and data (unintelligible), and then so on. And that’ll apply to, you know, many things in the world. We talk about bank transfers. If we talk about auditing and so on.

    So, if you’ll go to the next slide, what blockchain does is it essentially creates a platform. It created a platform where all these parties could come together on so-called shared ledger and transact.

    And so why is this something that’s gaining momentum in the past two years? And why wasn’t this created before? Because it just sounds like a database.

    So, the thing is blockchain has some unique characteristics because of the way cryptographic caches are built into it. And then the way that chain is formed, it has some unique (competencies) where it (deploys) the notion of immutability. That is, once you have written the data on the blockchain, you cannot modify the data. I mean, you can update the data. But then even that change would be required on the blockchain.

    So, that essentially gives to a notion of trust. If there is one word in the business language or in the common language that you should take which (requires a) blockchain that is trust. Blockchain provides - is a platform that provides trust between multiple parties.

    And because now that trust is there, parties are able to interact with each other more easily, right, with higher efficiency, and so on. And on top of the data that is put on blockchain, then one can actually have business logic, so-called smart contracts, and then execute that in a trustable way.

    So, this is the reason blockchain has gained a lot of momentum in many industries, right. Food industry is something that we started with. But of course, finance industry is also extreme. And in fact, the first use case for blockchain was Bitcoin is one cryptocurrency and cryptocurrency is just one use case of blockchain, right, whereas the real use cases are far beyond that.

    And supply chain, in our opinion, is - can be thought of as a classic super blockchain because if you - you know, blockchain is not a solution to every problem. But when there are multiple parties who are interacting, blockchain can play a role. And that is exactly what happens in the supply chain.

    If you could go to the next slide, so in the supply chain, there are various parties, right, from farm to grower to manufacturer and distributors, and retailers, right, consumers. When all these parties are interacting with each other and when I say interacting the data that is going across, right. So, in this case, for example, farmer grows, let’s say product mangos, and he sends it to packagers or manufacturers. They package them. And then - and they’re hot washed and processed and so on. And then they’re distributed. Then that goes and sit in the retail stores and then the consumer buys them.

    So then goods go to these lengths of supply chain. Is it possible?

    And today what happens is that the data is very siloed. Every entity in the blockchain maintains data in their own systems, which are all different types. So, how do you connect this data together? If we can connect all this data together in a clusterable manner, that is, everybody in the ecosystem can see the data and trust it, that can create great business value.

    And that’s where IBM, you know, we built a solution called IBM Food Trust. And this is - this can be used to actually save lives., right. And food safety is such an important thing, because today when a recall happens, it’s kind of not known why the - you know, the cause or where all the product has gone. It’s not known instantaneously. It takes days for all the retailers and suppliers to work together to find out where the product went and to remove it from the shelves and so on. And it’s possible in that timeframe that people may be buying food and, you know, they may be actually falling ill.

    So, by the way, do I have a few more minutes, or am I supposed to stop sharp 1:35 CT?

Rick Gabrielson:    We’ve got a number of things to cover. I would say maybe one or two more minutes and then we pretty much need to wrap up, unfortunately.

Godul Kandiraju:    Sure. All right. Sounds good. So essentially, multiple parties, you know, we have this slide. I can skip this one. This is more about details on how we are achieving it.

    Let me spend a few minutes on this slide and one or two minutes on the next one.

    So, FDA has this rule, which is part of Food Safety and Modernization Act, which says that everybody should start maintaining data to enable traceability, right.

    If you go to the next slide, then here we’re kind of showing, you know, the pink ones are all the attributes that FDA is asking for. And here we are just showing that by default today, take if you look at an IBM Food Trust Solution, we actually have pretty much all of them already in our data because we look at GS1 standards and we get data in a standardized way. And so, it has very good coverage.

    Next slide, please.

    And then one way we think to achieve the compliance of FDA rule is letting all the parties submit data to a blockchain platform where we are continuously checking for the compliance with FDA. And we are, you know, giving feedback for data collection and so on.

    So, this way, when something happens, when an incident happens, it’s very easy for FDA — next slide, please — to go and connect all the data. As you see here on the left, you have various parties of farm, manufacturing plant, right, distributor, and store. And these - you should see the zip codes and the connectivity. What we are establishing is by having data in a certain format it is extremely easy and almost instantaneously possible to connect all the data.

    And for example, if you say, hey, where is a product from this plant, you can immediately say from these stores. So that way FDA can act fast. The companies can act fast. We can save lives. It can be more cost-efficient. And we can do surgical recalls. We need not throw - let’s say there’s spinach recall. We did not do all the spinach in the complete supply chain ecosystem. We can precisely choose stores where spinach from that farm went and remove them.

    So, there’s great value here in using blockchain and for these kinds of use cases, right.

    So, I will skip the next use case but any questions.

Rick Gabrielson:    Thank you. Any questions at all from the team? If not certainly, you know, can send them to you, Shari, and you can…

Shari Diaz:    Yes.

Rick Gabrielson:    …respond to them, if that’s the case. Yes.

Shari Diaz:    Yes, absolutely. That sounds good.

Rick Gabrielson:    Were there any questions there (Jeff), anything? Hit star 1 everybody. Okay, Shari, thanks much. Really appreciate it.

Shari Diaz:    Sure.

Rick Gabrielson:    Sorry we didn’t have more time for you. But we want to make sure we get through…

Shari Diaz:    That’s all right.

Rick Gabrielson:    …our subcommittees as well. So that concludes all of our presentation, folks. Now we’re going to get into updates from our subcommittees.

    Before I turn it over to, I think Anne’s first, but before I turn it over, I talked with Eugene in retrospect. We know that we’ve got two recommendations that haven’t made it through the subcommittee process. One is from Trade and Regulatory. The other is Innovation Subcommittee.

    So, we’ve got those to address. And likely based on some of the presentations that we had this morning, you know, from Nellie and Monica and the Labor Team, and Dennis, there may be some things that, you know, the group and subcommittees are going to want to tee up and take a look at.

    And I think, as everyone knows, in order to hold an Ad Hoc Committee, because we certainly don’t want to wait till October again, you know, the main thing we have to deal with is the Federal Reserve Notice or Register Notice, I’m sorry. Not reserve. And get that out. And it’s got to be done at least two weeks in advance. And it takes some time for Rich to tee it up and get it through the process.

    So, we’ve got 4th of July right around the corner. What we’d like to do is shoot for Friday, July 16th, you know, for any subcommittees and two that we mentioned earlier, plus anything that might come out of today’s session to get approved in draft, you know, recommendations. Rich can then finalize and then we can shoot it up.

    But we’re tentatively planning for the week of August 2nd to maybe to hold an Ad Hoc Meeting. That would allow us to go through and cover the two that we’ve got, plus anything else that might surface in the next week or two.

    So, wanted to make that known to the group that we’ll take that approach, especially for those, you know, that have got draft recommendations, or anything they’d like to propose. Any questions on that before I turn it over to Anne? Okay, Anne take it away.

Anne Strauss-Wieder:    Thank you, Rick. Let me start with a soundcheck. Can you hear me?

Rick Gabrielson:    Yes.

Anne Strauss-Wieder:    Good. And thank you very much and great presentations today. So, a number of things regarding the Workforce Subcommittee. And as you could tell from the presentation, workforce is a critical issue in everything that we’re discussing.

    So, there are three areas that we have been looking at. One is the driver shortage, which Bob Costello can tell you is well over 100,000 drivers and growing. And then it’s not just a pay issue. And we all need to look at how to improve the driver experience, how we recruit, (retrain), and train and retain, as well as legislation, whether we’re talking the Under 21 Program (unintelligible).

    The second area that we have been focusing on and we exemplified in our last Subcommittee Meeting are collaborations between federal agencies and local organizations related to workforce. As you saw with U.S. Department of Labor and the City of Newark.

    And then advancing that and our third area of collaborations in general, public/private, private/private, academic, and public, and so forth, to really address proactively the workforce shortages that we have.

    So, in that regard, recommendations can’t promise Rick we’d have them by July 16th. But in two areas, one potentially looking at recommending an overall approach to addressing the driver shortage, covering the areas that I just addressed. The second on encouraging collaborations. So that those are two potential recommendations.

    In terms of our subcommittee next steps, we’re going to continue to have Subcommittee Meetings virtually. Other members of the committee are welcome to join for examples of federal and local collaborations or, you know, practices with workforce. So, anyone on the committee, if you’d like to suggest it, be in touch with me. Or also probably based on conversations this morning, maybe having two presentations by schools, even at the high school level that have introduced logistics and other training programs that address transportation, distribution, production, and so forth. So, details to follow on that.

    And I’m going to try to give you back more time. So, I’ll open it up to other comments by committee - subcommittee members and any questions from the floor. Thank you.

Rick Gabrielson:    Thanks, Anne. Questions for Anne. Okay, hearing that, maybe we’ll jump to the next one, which would be the Freight Movement Policy and Infrastructure Group. We actually do have a recommendation that came out of the subcommittee. Was sent out to the group about a week and a half or two weeks ago. Hopefully, folks have had a chance to take a look at that.

    And it’s really our recommendations, you know, to — and it’s popping up on the screen now — to the Secretary on, you know, how freight infrastructure investments, you know, best be structured and implemented to achieve supply chain efficiencies and improve overall freight system performance.

    And it’s - this is moving very fast. And we’re wanting to get it up to, you know, the Secretary and onto the White House that - the American Jobs Plan, as they continue to advance it forward. And I just heard a little while ago that senators and the President have agreed to an infrastructure package. So, it’s moving fast. So, this is one where that we call it speed of life. And we want to try to get this approved today with the committee.

    I did get a text earlier from Leslie who put a lot of work into this as well, that based on some comments that Monica was making, we may want to alter a little bit of the letter itself.

    But at this point, I would maybe open it up to (Leslie) on your comments that you might have and then to the group. Are you able to turn (Leslie)’s mic on? Jeff?

Richard Boll:    Hey Jeff.

Coordinator:    Leslie.

Richard Boll:    Can she do star 1 and then that…?

((Crosstalk))

Coordinator:    (Unintelligible) if you can press zero.

Richard Boll:    And then you could pop her in.

Coordinator:    Leslie, again it’s star zero.

Richard Boll:    Is Leslie on?

Rick Gabrielson:    Leslie, are you there?

Richard Boll:    Is Leslie on? Push star 1.

Rick Gabrielson:    Zero he said.

Richard Boll:    Oh I’m sorry. Star zero. Sorry.

Coordinator:    Leslie, your line is now open.

Leslie Blakey:    Okay. Hi, everybody. Been star one-ing, star zero-ing, star 52-ing, whatever. I hope you all can hear me now.

Rick Gabrielson:    We can.

Leslie Blakey:    Hello? Okay, good, good. Okay. So, the situation on this is you - literally, as we have been speaking and listening during this meeting, has been moving forward. There was a deal that was struck with the White House on an infrastructure package that was blessed by Biden just a few moments ago at 2 o’clock.

    And so that does not, though, close out the whole negotiation process. Because Pelosi has indicated that she does not want to bring an infrastructure bill to the floor without conditions from the Senate.

    And so, there’s still work to be done both - you know, in the negotiation. But simply put, the package as it stands right now is for around a - everybody keeps talking about it being 500 and - between 5 and $600 billion over baseline spending. So that - it’s unclear whether or not this bill actually has additional spending besides this $.5 billion, I mean, $.5 trillion dollars or what - it’s unclear what the baseline spending proposal is.

    But to get to our point here on this letter, there is a very, very substantial portion of that 500 - 5 - $600 billion that is for transportation infrastructure.

    So, we would like for Secretary Raimondo to be proactive in advocating for supply chain infrastructure with the Administration on how that money is going to be administered.

    So, the changes that I think need to be made to this letter because it is no longer the American Jobs Plan as proposed by the White House, which was over a $2 trillion proposal. It’s now been, you know, back to this $.5 trillion proposal so but it doesn’t have a name yet.

    So, the - my suggestion here is that we amend the first sentence in the letter to say - thanking the Secretary for her speaking with us in the April 22nd meeting. And then it says, and for your leadership in furthering the Administration’s, and I suggest we insert there, infrastructure investment proposal, comma, the American Jobs Plan. That covers what happened today at the White House.

    And then in the second paragraph, I suggest we amend the first sentence to say on behalf of the committee we are writing to share our perspectives on how freight infrastructure investments pursuant to the plan or other infrastructure legislation, should best be structured and implemented to achieve supply chain efficiency and resilience, and so on. So that we cover what is going to be ultimately the bill passed by Congress.

    And then finally, just one other similar change. The very last sentence in the letter would say, instead of the American Jobs Plan, it would say, our committee looks forward to working closely with you as the infrastructure investment package advances.

    So, these are not really substantive changes. But it does make our letter more timely to what’s actually happening now.

Rick Gabrielson:    Got it. Can - thank you. Any discussion, first of all, on (Leslie)’s points? If not, Eugene, can we go back to the beginning, and since you’re kind of controlling the audit here to go through and maybe make those changes so everyone can see it, and then we can have a discussion and then vote.

Leslie Blakey:    And Eugene, I tried to send you a track changes version with this, but I don’t know if I got to you. I sent it to you (Rich) and Rick.

Eugene Alford:    Okay. Well, thank you very much. I am actually having connectivity challenges right now. Well, okay, maybe not. But I don’t believe, Rick, that I can edit in this particular platform.

Rick Gabrielson:    Okay.

Eugene Alford:    It’s not my actual screen. This is the WebEx so.

Rick Gabrielson:    Oh, it’s a WebEx screen. Got it.

Eugene Alford:    So.

Rick Gabrielson:    Let’s go back, if we can, to the very first change that you were…

Leslie Blakey:    Okay.

Rick Gabrielson:     …making here. Let’s see here. Let me try to get that in here if we can. Okay. Sorry about that.

    Can we - let’s go back and read that again (Leslie).

Leslie Blakey:    Sure. Yes.

Rick Gabrielson:    It’s the first paragraph or second paragraph.

Leslie Blakey:    First paragraph and it’s the second line where it says and for your leadership in furthering the Administration’s infrastructure investment proposal is what I suggest we insert and then a comma.

Rick Gabrielson:    Okay so, yes, I’m sorry. Infrastructure, what?

Leslie Blakey:    Infrastructure investment proposal, comma, the…

Rick Gabrielson:    Yes.

Leslie Blakey:    …American Jobs Plan.

Rick Gabrielson:    I’m sorry. Say it one more - the American.

Leslie Blakey:    The, T-H-E, the American Jobs Plan.

Rick Gabrielson:    Oh. Oh got it, got it. Okay, and that makes sense.

Leslie Blakey:    It would read, therefore in furthering the Administration’s infrastructure investment proposal, comma, the American Jobs Plan.

Rick Gabrielson:    Got it. Okay. And then the second one, second paragraph is…

Leslie Blakey:    The second paragraph, again, the second line where it says investments pursuant to the plan, comma, or other infrastructure investment legislation, comma. So, again…

Rick Gabrielson:    Got it. Should be best structured and implemented. Got it. Okay.

Leslie Blakey:    Okay, and then.

Rick Gabrielson:    And then I think - go ahead.

Leslie Blakey:    Then finally, the very last sentence scrolling all the way down, instead of saying working closely with you as the American Jobs Plan advances, instead say working closely with you as the infrastructure investment package advances.

Rick Gabrielson:    Advances, got it. So those three changes so.

Leslie Blakey:    Those three changes.

Rick Gabrielson:    Go ahead.

Leslie Blakey:    Yes.

Rick Gabrielson:    Does anyone have any concerns or concerns with that language? Okay. Having that, any other discussion?

Richard Boll:    Jeff, are you - can you ask for people to chime in and see if there’s any questions, please?

Coordinator:    Yes. We have a question from Jonathan Rosenthal. Your line is open.

Jonathan Rosenthal:    Good. Rick, can you hear me?

Rick Gabrielson:    I can. How are you?

Jonathan Rosenthal:    Fantastic. I’m good, Rick. How are you? So, I just wanted to - you know, we keep getting - what keeps coming back to us all is the power of information and the lack of good data across the supply chain. I think we all sort of agree that that’s a challenge. We have an opportunity here in this letter. And I don’t want to delay anything. And I don’t want to sort of set us back.

    But we may want to mention digital infrastructure. We’ve talked about that in the past and smart infrastructure. Because one of the things we’re not doing is we’ve not put any emphasis on the power of information and the need for not just infrastructure, but infrastructure that has the ability to inform.

    So, you know, what I think of is smart infrastructure. And I’m just wondering if we could just add, you know, add that, you know, very simple language.

Leslie Blakey:    Jonathan, we do have a reference to that in the - under the first, the number one recommendation where we say the ACSC recommends approaching infrastructure investment in terms of multimodal gateways and corridors, comma, and a robust expansion into digital infrastructure.

Jonathan Rosenthal:    Okay. I missed that. That’s good.

Leslie Blakey:    And you know, we can’t - we - if we go into too much detail here, we’ll run this way too long so.

Jonathan Rosenthal:    No. I think you’ve, you know, just put a pin in it so that we can raise it later. I think that’s adequate. Thank you.

Rick Gabrielson:    Good. Thanks for surfacing it. Thanks, (Leslie). Any other questions?

Coordinator:    Yes. We have a question from (Joe Bryant). Your line is open.

Joe Bryan:    Rick, there are a couple more references to American Jobs Plan on the second page. So we may want to change that wording in accordance. Otherwise, you know, clearly, I’m good with this letter.

Leslie Blakey:    Thanks, Joe. I looked at those. And I felt as though in context, it was fine to leave them. Like one of them says, as emphasized in the American Jobs Plan. Well, that’s the place it was emphasized so I think…

Joe Bryan:    Okay.

Leslie Blakey:    You know, the - it’s kind of only in the action forcing area that I think it’s really important that we…

Joe Bryan:    Okay.

Leslie Blakey:    …make sure to…

Joe Bryan:    I’m good with that. Leslie, I’m that we have good with that. That’s fine.

Leslie Blakey:    Yes. Hopefully…

Rick Gabrielson:    Good follow-up Joe.

Leslie Blakey:    …what we’ve done is make sure that she knows that we’re not just referring to something that now is part of the record, but is actually under consideration.

Joe Bryant:    Okay.

Rick Gabrielson:    Right. Inclusive of other things. Okay. Other questions.

Coordinator:    I’m showing no further questions.

Rick Gabrielson:    Okay. So, since we’re on the WebEx, do we - how do we vote?

Eugene Alford:    Hey Rick. Rick, I’m sorry.

Rick Gabrielson:    Yes.

Eugene Alford:    This is Eugene. I have - I would be able to, in about one minute, upload the edited version just…

Rick Gabrielson:    Okay.

Eugene Alford:    You know, just bear with me one second. Thanks.

Rick Gabrielson:    Sure. While we’re doing that, Rich, how do we vote on this stuff, knowing that, or do you open all lines at once and everyone votes that way, and then you call close them? Is that what you do?

Richard Boll:    Yes. I guess it can - and I don’t think there’s any certain way to vote other than, you know, opening lines for, you know, someone that says no. You know, open up the line, I think is the only thing we can do.

Rick Gabrielson:    Okay. Maybe just open up the lines and to vote that way.

Richard Boll:    Right. If anybody has a question, that would be their question. They could say no or yes, whatever or no. We’ll assume more people are going to be saying yes, and probably all of them will probably say yes. But if we just…

Rick Gabrielson:    Right.

Richard Boll:    …do it for one person, no, then we should be fine.

Eugene Alford:    This is it. It just doesn’t’ have a track change in it. So, you can - as you can see in that first sentence, second line, for your leadership and furthering the Administration’s infrastructure investment proposal, the American Jobs Plan. So Leslie…

Rick Gabrielson:    Yes.

Eugene Alford:    …and Rick make making sure that this captures it here.

Rick Gabrielson:    It does there. And go down to the second one. It captures it there. And then if you just go to the last page, Eugene. Perfect. I think it’s there. Okay. That captures that. I don’t think we had any other questions.

    (Jeff) if we’re able to open up all lines, if you’re able to do that type of thing. And we can do a voice vote for yays…

Coordinator:    Yes. Your lines are open.

Rick Gabrielson:    …and if there are any nays. And we can close it back up again. Let us know when you’ve done that.

Coordinator:    All lines are open.

Rick Gabrielson:    Great. Can I get a vote? All those that are in favor of the amended letter say aye.

Group:    Aye.

Man:    Aye.

Man:    There’s delay.

Man:    Whatever you want.

Rick Gabrielson:    And the nays. Great, recommendation passes. Thanks to the entire team for all the work that you put on it and put into this. And we will begin to move that forward. That’s it for our subcommittee.

    And I suspect after today’s call we will have more items that we’ll take action on. And likely be setting up another Subcommittee Meeting and try to shoot for that July 16th date, if at all possible. So, thanks much team.

    Now I’ll turn it over to Norm for Trade and Regulatory.

Eugene Alford:    Norm may have to connect through the star 1.

Coordinator:    Norm, if you hit star zero, that will signal, and I’ll open up your line and let me know that is you.

Norm Schenk:    Hey, Rick, this is…

Coordinator:    Your line is now open.

Norm Schenk:    Okay. Hey, Rick, this is Norm. Can you hear me?

Rick Gabrielson:    Yes.

Norm Schenk:    Okay, great. All right, so I was between the star 1 and the star zero, but yes.

Rick Gabrielson:    Thanks.

Norm Schenk:    Okay, all right. Well, thank you and hi everybody. I have a relatively brief report. And I’ll start it off and then I’ll turn it over to Gina, the co-chair in case she has anything to add.

    This morning, first, I want to mention that I think Val’s update from CBP was quite positive and constructive on a number of things. And I won’t repeat what she said.

    But one of the things that she covered were consistent with some of the concerns that we had expressed as a subcommittee and/or full committee, particularly with respect to some of the data discussion.

    And I didn’t hear her explicitly say it. But yesterday in the Public COAC Meeting, (Brandon Lord) had mentioned, and this is pretty significant, that the - one of the things that we had expressed multiple concerns about in previous meetings was the potential requirement for an HS Number for the low value de minimis shipments.

    And they announced yesterday that customs is not going to be pursuing that and using alternative trusted trader requirements, basically what’s being used today mostly by the larger carriers that can handle lower shipments for that.

    And then also it was very encouraging to her say that the webinar was being put together, that the de minimis rules for one shipment per day. This is tied more to e-Commerce shipments. But a lot of the shippers, particularly over in Asia, aren’t aware of the requirements. So, thanks to CBP for putting that together. I think it’s going to be really helpful to both the private sector and CBP from a compliance perspective.

    And again, I want to thank Val for the good updates on that one.

    From a subcommittee perspective, I know we’ve previously discussed the issue with respect to the elimination of the export filing requirements for Puerto Rico. We were hoping to have it done for today. But we’ve had a few nuance changes here on that. Nothing really fundamental on that. But as Rick indicated earlier, we’re going to put the finishing touches on that and certainly can meet the timeline for the upcoming meeting.

    One of the other things that we’re looking at going forward and again with CBP has been very transparent about sharing some of the things that are going on there. And there’s some good programs. There’s some also ones that have some concern from the supply chain perspective. And one of the ones that, I’ll say, has certainly been an ongoing concern is the continued reliance on data, particularly with respect to more data.

    And we haven’t taken any formal action as a subcommittee yet. But one of the things that we’re going to be talking about is a potential, I’ll just call it an overhaul, of the CTPAT Program. Certainly, after 9/11, there were a lot of positive things that went in through CTPAT. But quite frankly, it’s kind of outlived its usefulness. And there’s not a lot of companies that are joining or using it. And the global implications are quite large.

    So, one of the things we’re going to be talking about as a subcommittee is connecting the dots on a lot of things from certainly, a customs, and other PGA perspective that are important to both sides. And instead of looking at it kind of as an ad hoc one-off, how do we deal with this and that, potentially make some recommendations that, again, would connect the dots and provide a more comprehensive program that would help CBP and the PGAs achieve their goal. Yet at the same time, make it more -certainly, bring more greater return on investment to the private sector and to simplify the flow through the supply chain.

    So, we’re going to be potentially looking at that. I want to quickly mention that I want to thank Shari and Godul for the presentation on blockchain. I know we didn’t have time for her comments. But I’m going to throw a rhetorical comment out there that perhaps in a subsequent meeting or we can have them follow up on it. Certainly, IBM’s been a leader and done a lot of great work on the blockchain side. I know personally, when I get on a lot of blockchain discussions, it’s almost every call where you have a blockchain discussion. The other piece to that is the use of artificial intelligence related to data and/or electronic images and those type of things.

    So, you know, perhaps certainly as a subcommittee and we can engage the IBM folks to maybe, you know, help with that. And so how do we, again, do things without relying on more data? And again, we hear a lot of comments about the quality of data on that. 

    But, you know, personally speaking, for myself and I think I can for a number of our other committee members, this constant discussion about adding more data just doesn’t make a lot of sense for that. So, we’re going to be potentially taking a look at that as well.

    And that’s pretty much from my side, Rick. I don’t know. I know Gina was one earlier. But I’m going to pause here and open it up. If Gina wants to add anything for her perspective and/or I know Mike Mullen is on the call. He’s been doing a lot of work on the Puerto Rico thing. Again, we’re real close and we’ll meet the timeline on that. But other than that, that would be my report, Rick. Thank you.

Rick Gabrielson:    Great. Thank you much. Gina, anything to add? It’s star zero (unintelligible).

((Crosstalk))

Richard Boll:    Open her line too.

Mike Mullen:    So maybe while Gina is trying to get into the call, this is Mike Mullen. I could just follow up a little bit on what Norm said about Puerto Rico.

Rick Gabrielson:    Sure.

Mike Mullen:    Okay. I sent a draft letter around to the subcommittee two weeks ago. And as Norm said, we’ve made some tweaks on that. So, there’s going to be a new version that we can get out to everybody here in the next couple weeks.

    And it’s similar to letters we’ve sent before. But there’s been some new wrinkles because we’ve had these responses to the ANPRM that Census put out asking for comments. And there were some very interesting responses, particularly one from the Office of Insular Affairs and the Department of the Interior, which produces economic statistics for the Virgin Islands, plus Guam and the Marianas and American Samoa.

    And they get reports from BEA that are based on data from Census. And obviously, for the other three islands, they’re not relying on the EEI data and the reports are totally adequate for their purposes.

    So, it’s clear that there are workable alternatives to the EEI data. And that it’s really not necessary. There were a large number of responses to the ANPRM, particularly from all the large associations that said the requirement should be eliminated.

    And the point of sending a letter to the Secretary is we really need to get some senior-level help with this. Census by itself will never eliminate this requirement. You know, and I’m not sure why. I mean, maybe they feel like it would - they would - it would be an admission that they’ve been making a mistake over all these years and costing people millions of dollars for nothing.

    But it’s - Census has had these responses to the ANPRM for seven months. And every time they appear in public, they say, oh, we’re still working on it. But, you know, it’s just too hard for them to eliminate this by themselves.

    So, we really need somebody senior in the department to look at this and say, hey, this just is not necessary anymore.

    So, we’ll be working to get this letter fine-tuned and through the committee. And as Norm said, I’m sure we can meet the schedule that’s been laid out for this. Thanks.

Rick Gabrielson:    Great. Thanks, Mike. Anything else, Norm or Gina?

Norm Schenk:    No. Nothing else on my side, Rick. Thank you.

Rick Gabrielson:    Okay great. Thanks. Let’s see. Let’s move over to Innovation, Technology, and Strategic Competitiveness, Melzie.

Richard Boll:    And Melzie was on earlier. I guess she has to do the (unintelligible).

((Crosstalk))

Rick Gabrielson:    Yes, it’s star zero.

Melzie Wilson:    Hello?

Rick Gabrielson:    Yes. Hey Melzie.

Melzie Wilson:    Okay, just to make sure. Hi. good afternoon to everyone. We are in the final stages of pulling together our letter. We feel we’re just missing the mark just a little bit. But we’re hoping with meeting hopefully by tomorrow, we can come up with an extended draft to the one we have now and reposition it back to the committee. The committee gave us some great feedback of which changes were made. And we’re down to about eight comments that we feel that improvement needs to be made. So, we will be ready for that 16th deadline. I think - I can’t remember who was asking, if it was you, Rick. So, we will be ready for that…

Rick Gabrielson:    Yes.

Melzie Wilson:    …date and we will be moving forward with our e-signatures, the e-bills of lading, as well as the digital handshake initiative.

Rick Gabrielson:    Great.

Melzie Wilson:    (Unintelligible).

Rick Gabrielson:    Any questions for - from the group to Melzie, et al? Give it a minute here and see if anybody’s got any questions.

Melzie Wilson:    And yes. And the presentations, I want to be able to go back and see some of the links and the comments to what was made by Monica and a few others early this morning. I think that may help us out some too.

Rick Gabrielson:    Oh, I would agree with you. I think it will. I’m guessing that most of the groups are going to want to go back and look at that again. I know I certainly do.

Melzie Wilson:    Yes.

Richard Boll:    And this is Rich. With that said, we’ll try to get those on the web site as soon as possible.

Melzie Wilson:    Yes, please.

Rick Gabrielson:    Great, fantastic. Fantastic. Okay. There’s no questions for Melzie or any of the groups.

Melzie Wilson:    Did you send out an email?

Rick Gabrielson:    Oh. Go ahead.

Melzie Wilson:    Rich, could you send out an email when you get that completed, please?

Richard Boll:    Sure.

Rick Gabrielson:    Thanks.

Melzie Wilson:    Thank you.

Rick Gabrielson:    Okay. If there’s no other questions, that kind of wraps up our scheduled agenda for today. And just maybe some closing comments for the group. Our next group will be the Ad Hoc Meeting likely in August. After that, it’s October. We haven’t decided yet, but I certainly hope that we’re able to maybe do an in-person meeting, which would be wonderful.

    I want to make sure we thank all the speakers. We had some great, I think, discussion today, some good presentations. Some good thoughts coming up from some of the actions that are taking place in Washington. And I think that we can play a big part of and have an active role in that and some good food for thought that we can focus on as a group.

    So, with that, I want to thank everybody for taking your time to spend with us today and be part of our meeting. And wish everybody a safe day, and we’ll talk soon.

Coordinator:    This concludes today’s…

Rick Gabrielson:    Goodbye everyone. Thanks.

Coordinator:    This concludes today’s presentation. You may disconnect at this time. Leaders, please stay on the line for final line count and post-conference. Thank you.

Rick Gabrielson:    Thanks. Jeff.

Richard Boll:    Thanks, Jeff.

END TRANSCRIPT