Advisory Committee on Supply Chain Competitiveness: October 2021 Meeting Transcript
Meeting Transcript from Advisory Committee on Supply Chain Competitiveness (ACSCC) meeting on October 21, 2021, in Washington, DC, via Webex.
Advisory Committee on Supply Chain Competitiveness (ACSCC)
Thursday, October 21, 2021
10:00 am EST
Moderator: Richard Boll
Coordinator: Welcome and thank you for standing by. At this time all participants are in a listen-only mode until the question-and-answer session of today’s call. At that time if you would like to ask a question, you may press star 1. I would now like to turn the meeting over to Rick Blasgen. You may begin.
Rick Blasgen: Well, thank you very much, and welcome everybody. Good morning. Good afternoon. Good evening, wherever you might be in the world. We appreciate everyone taking the time to participate on this call. To say a lot has happened or is happening, is certainly an understatement. We all have sort of seen what has gone on over the last year and into this year, and there’s no shortage of opportunity for our committee to have an impact.
And I always try to remind myself and all of us, that that’s our goal, is to make recommendations that can help our country increase its competitiveness on the global supply chain stage. And obviously, there is no shortage of topics or opportunities and challenges certainly to go around. So we have a terrific agenda today. I want to thank everyone for the time and effort that they put into securing the speakers on the staff side, and all the work done by the subcommittees. We’ll hear from them.
One recommendation that we’re asking the committee to vote on today, and I know that there’s other work that’s being done, but we do have quite a few speakers who have agreed to address our committee and I think that’s fantastic. And I thank them in advance. Before we introduce Heather, let me turn it over to Rick, our co-hair, for his words of wisdom. Rick?
Rick Gabrielson: Thanks, Rick. I, too, would welcome everybody. There’s a great agenda today. And I would - I truly believe that given some of the speakers that we’ve got coming in today, that that will drive number of other recommendations to the subcommittees. As Rick mentioned, we do have one set that we will be discussing and voting on today, to hopefully move forward to the Secretary.
We’re certainly in unprecedented times. And I think there are lots of opportunities where our committee can continue to make recommendations up to the Secretary, to increase our competitiveness within the country. With that, I’ll - I think Rich, you may have a few comments?
Richard Boll: Yes.
Rick Blasgen: Thank you very much, Rick. Go ahead, Rich.
Richard Boll: Yes. I just wanted to, you know, as DFO of the committee, I just wanted to welcome everybody, and also thank all the speakers for presenting today. We appreciate their help in getting the information out to our committee members And I just wanted to let everyone know that the - this is an open meeting of the advisory committee and supply chain competitiveness. It will be recorded. The audio will be recorded. And it’s open to - as I said, open to the public. And there will be press on the call as well. So I just want everyone to be aware.
Thank you and I appreciate everyone’s help with the meeting. Thank you.
Rick Blasgen: Well, thanks, Rich. Heather Sykes, welcome. I’d like to turn it over to you for you to address our group. Thanks for participating today.
Heather Sykes: Thank you, Rick. Good morning, everyone. I’m excited to join you all again today for an ACSCC meeting that will focus on the main importance of supply chain and economic developments that have taken place over the last few months. We greatly value the ACSCC’s input and recommendations, which help us to support US export growth and national economic competitiveness, encourage innovation, facilitate the movement of goods, and improve the competitiveness of the US supply chain for goods and services in the domestic and global economy.
Today we have a number of great speakers. We will hear from Jim Cafone, the Vice President Business Strategy Operations at Pfizer, concerning the development and distribution of the COVID-19 vaccine. Ronnie Chatterji, the Chief Economist at the US Department of Commerce, will speak about the supply chain disruptions task force. Jessica McBroom, Director for International Economics at the National Security Council, will speak about developments related to the Executive Order on America’s supply chain.
And you will also hear from various US government agencies on a variety of supply chain related issues. In addition, the ACSCC plans to consider recommendations concerning how to address the current national supply chain congestion crisis. But first, I would like to welcome John D. Porcari back to the ACSCC. On August 27, 2021, the White House announced that John D. Porcari would be the Port Envoy to the Biden-Harris Administration Supply Chain Disruptions Task Force.
Mr. Porcari is a nationally recognized public and private sector infrastructure leader who has delivered some of America’s most challenging projects and driven the adoption of equitable community-serving infrastructure policies and projects at the local, state, and federal level. As Deputy Secretary and Chief Operating Officer of the Department of Transportation, Mr. Porcari was directly involved in overseeing port, intermodal, and maritime policies on maritime-related competitive grant programs throughout the United States.
In a previous role, serving twice as secretary of transportation for the State of Maryland, and Chairman of the Maryland Court Commission, Mr. Porcari initiated a strategic plan for the Port of Baltimore. This (unintelligible) largest roll on/roll off port in the nation, exporting construction and agricultural machinery from the Midwest to the world, and growing the port into one of the nation’s top 10 in terms of both the high value and tonnage.
Under Mr. Porcari’s leadership, the Port of Baltimore also entered into a public/private partnership to expand its (unintelligible) container terminal, adding a fourth 50 foot container berth and start of the art crane to accommodate the newest super (post-panamax) container vessel. This 50-year, $1.3 billion investment, has become a national model. Mr. Porcari will provide some brief remarks and then we’ll turn it over to take your questions. So now I would like to introduce Mr. Porcari.
John D. Porcari: Thank you, Heather, and good morning, good afternoon, good evening, whatever is appropriate, everyone. I really appreciate the work that this group does. And having participated in the past, I would urge you to keep moving forward. The work you do collectively, is really important.
I wanted to very briefly talk to you about the goods supply chain work and one element of the task force, both the short term and long-term efforts, starting with the ports, but including the entire goods movement chain. In the short term, we’re in a bit of a sprint to work down the backlog, in particular at ports of Los Angeles Long Beach, which together are 40% of the container imports for the entire country.
In the longer term, it’s building the kind of policy funding and other infrastructure needed to have the future facing part of our goods movement chain reliable and more fluid; more redundant; and certainly with more velocity. So the short-term part is operational and tactical, really working with again, starting with the ports, but the entire goods movement chain and making the kind of operational changes that are long overdue and were arguably needed long before the pandemic.
But I think the pandemic laid bare what was the underlying deficiencies in our goods moving system. The reality is the container traffic is up considerably about 30% in the case of Port of Los Angeles and about 23% in the case of the Port of Long Beach, and nationally as well. But we’re also buying differently. Our consumer buying patterns are different, which has additionally stressed the goods movement chain.
So on the short-term side, we have an operational action group that meets three mornings a week, Monday, Wednesday and Friday, for those two ports. Includes the executive directors of both ports, labor, management, every terminal operator, the ocean carriers, Department of Homeland Security, White House staff, the railroads, the trucking industry, basically everyone required to solve problems, if at all possible on the spot, during these meetings.
And we are going through a number of issues every morning on that. I think one of the interesting dynamics, somewhat remarkably, is many of these parties, these private sector parties, don’t actually talk to each other that much on a daily basis. And this has been a forcing mechanism to really get parts of the goods movement chain, which are private sector owned and operated, to work with each other.
It’s also worth pointing out there’s a real paucity of - a real lack of data, transparent, actionable data, that’s shared throughout the goods movement chain. And it’s hard to improve what you can’t measure. So that - put that one in the longer-term category. So we’re focused on both the short-term disruptions in working through them. And then quickly, pivoting to the longer-term part of it, I wanted to mention a couple of things.
Again, starting with data - we collectively, clearly through a whole of government and industry approach, need to make sure that we have accurate, transparent, actionable data, which is not a defining characteristic of the goods movement industry right now. We need real time data and commonality, or at least interoperability, among different ports, terminal operators, trucking companies and others.
It is the defining characteristic of the data in the goods movement chain, is that it is very difficult to make operational improvements in the short term from it. So that is clearly a place where having a common open architecture system would actually be very beneficial. I’d also point out that there’s an existing planning and project delivery mechanism that’s way underutilized in this, and those are the state freight plans.
Every state puts together and periodically updates freight and goods movement plan. Some of them are very sophisticated, very well thought through, multi-modal plans that include every element of the goods movement chain in their state and regions. Others, frankly, are not very multimodal at all. We’re working through a process to make the state freight plans much more usable, much more multimodal, and much more actionable in terms of suggesting specific infrastructure projects, private and public, that will speed up the goods movement chain.
In the short term we’re working directly with the State of California on that as a kind of pilot. You’ll see very shortly, some very positive results from that. But what we need to do is think of the goods movement chain as a system of systems, which is what it really is. And making sure that the states appropriately think of it that way as a linchpin of their economic development strategy, and fund projects accordingly.
I’d also point out that the bipartisan infrastructure bill has significant funding, not just reports for the first time, but inland waterways, rail, highway capacity for trucks, and other elements that are really important. So if you think of this as short term and long term, in the short term we’re pulling every operational lever that can be utilized to squeeze efficiency out of the system that we have now and actually work through the backlog.
And in the longer term, the future-facing part of it, making sure that we actually have an economic development foundation for the nation that will service through the 21st Century. I think we have to be honest. If you look around at the infrastructure that we have now related to goods movement, much of it was paid for by your parents and grandparents. And it’s time for us to pay it forward and do better by IJA, the bipartisan infrastructure bill, is a significant step forward in that regard.
So those are a couple of the short term and longer-term measures. It’s - let’s use the spotlight, which is currently on the goods movement chain, to actually work through these improvements and build a consensus for a more robust, a more flexible, and resilient goods movement chain with significantly greater velocity.
So thank you, all. I’d be happy to answer questions or field any comments.
Richard Boll: Valerie, could you please set up a Q&A, please, for Mr. Porcari?
Coordinator: Yes. Certainly. If you would like to ask a question, please press star 1 and record your name clearly when prompted. Please also state your name and affiliation before asking your question. One moment, please for our first question. Our first question comes from Jonathan Rosenthal. Your line is open.
John Rosenthal: Great. John, I really enjoyed your comments. So I - as most of the members know, I run a private equity firm that focuses almost exclusively on companies within the supply chain, you know, warehouses, trucking companies, you know, all kinds of stuff. In the last five years almost our entire focus has been on information technology.
And your comments about interoperability of operating systems and the ability to see across the supply chain, you know, is music to my ears because it’s something we’ve been pushing for, you know, four or five years. I just wanted to alert you and invite you to participate in the effort that we’ve been working on. We formed a partnership with a company called (ESRI). You might have heard of them. They are - the things you’re talking about, that is knowing where something is, knowing when it’s supposed to be where it is, and, you know, so we think of that as descriptive information.
And that’s great. And we’re sort of getting there, particularly with the advances in remote sensing where you can actually remotely sense those assets. So there’s going to be more and more of that. The real thing that we’re focused on as well, with ESRI, is understanding predictive analytics so that we know in advance, when there is going to be disruption.
So we formed a partnership with ESRI. ESRI has actually given us - it’s called ESP. Very fancy name. Our name is Saybrook, their name is ESRI, and it’s a partnership. So we called it ESP. Super creative. But the - they have given us exclusivity over their platform.
And you probably know that their platform is by far the largest platform in the world for geospatial information; 350,000 customers, 10 million users. But they have not applied the power of that platform, which is enormous, really to the logistics market. They’ve only applied it to individual companies.
So, for example, UPS’s Orion system is built on ESRI backbone. You know, a lot of systems are built on every backbone, but they’ve never applied it across nodes. That’s not what they do. So we entered into an agreement with them and now have exclusivity. And we’re now - we’ve committed $200 million to using the (ESRI) backbone to build exactly what you’re talking about.
Now there are…
Richard Boll: John?
John Rosenthal: Yes. Go ahead.
Richard Boll: This is Rich Boll. We’re trying to - we have a bunch of people in the queue for questions…
John Rosenthal: Oh, sorry. Sorry. Go ahead.
Richard Boll: Want to get to the point, please?
John Rosenthal: I thought it was. John, I would - is that something you would want to get involved with?
John D. Porcari: Let me first say that, just to be clear, we need to be vendor agnostic. So what we’re looking for is system performance. And whether it’s a system of systems from various private sector initiatives, or is a more overarching one, as long as it provides the results that we’re looking for, the data, we need to be agnostic.
I’m aware of not that one specifically, but a number of others out there as well. And I think the collective work that we need to do in the goods movement chain, is to define the data requirements, and then as individual companies and public organizations step up to provide that data and make sure it’s integrated.
So what you’re describing is very interesting. Again, it’s - outcome-based is what we need to do. And I would just close this question by contrasting surface goods movement with say the airline industry, where there is a lot of proprietary data, but there’s a lot of publicly shared data that compete fiercely. And on the data side you get it on a daily basis. That is not true in the goods supply chain. And I think the country suffers because of that.
John Rosenthal: I agree. Thank you for those comments.
Coordinator: I show no further questions in queue.
Rick Gabrielson: Rich, I’ve got a question or a statement for John?
Richard Boll: Go ahead, Rick.
John D. Porcari: Please go ahead.
Rick Gabrielson: Thank you. John, this is Rick Gabrielson, Vice Chair and President of RS Gabrielson and Associates. I guess more of a statement to make is that I concur with your comments as you need to be platform agnostic or neutral. And the - there are a couple of groups that are working on developing standards.
And, you know, similar to what happened in the banking industry, you know, until they had those standards it was difficult to be able to communicate or work back and forth against - across, I should say, different banking systems.
And so I think what’s important is, in order to get to the state where you discuss what we talked about, it’s important that both terminal operations, port operations, especially the ocean carriers have all got a standard set of standards. And once that’s in place then it’s easier for any platform, whatever platform it might be, and you want to be neutral to that. I agree with that. It makes it much easier. Otherwise, it’s the old garbage in/garbage out.
John D. Porcari: Yes. That’s an important point on the standards side. And I neglected to actually mention that. But I would say, for example, the Joint Program Office at USDOT, is working on that right now. And I think there’s a great opportunity for collaboration on that. Where we really need to go as a supply chain is 24/7.
And you can see that this is a big beast that does not move quickly. But data, and accurate data, is essential to actually moving to a 24/7 supply chain through the entire supply chain.
Rick Gabrielson: You’re absolutely correct. I agree with you.
Rick Blasgen: John, this is Rick Blasgen, the Chair of the committee. I also have a question, if you don’t mind.
John D. Porcari: Sure.
Rick Blasgen: One of the axioms of supply chain management is seamless, fluid, unobstructed flow between key supply chain participants up and down the chain. So, you know, if you fix one area you just move a bubble further down and it gets held up there. Do you think the people that you’re dealing with, all of the people you mentioned that need (unintelligible) they understand that I’m assuming, if they’re in this industry, it’s very, very hard just to snap up, you know, flip a switch and have that light immediately go on.
But do they understand that? Are we - I mean obviously people are focusing on what’s in the news or, you know, the major point of the problem. But everybody has to participate in a new system that’s more fluid.
John D. Porcari: It’s a great question. And one of the really interesting phenomena in the last couple of weeks with me, is how many C-suite executives have said I know we need to go to 24/7 supply chain; how do we do it? I can’t do it by myself. I can’t flip that switch on my piece of the supply chain. All of which is true. And if you look at in the short term what we’ve been focused on, it was first turning on a green light and sending a strong signal from those two ports - LA and Long Beach, that they are 24/7-capable and willing and committed to getting to full 24/7.
Then we worked the other end, the beneficial cargo owners, and secured enough aggregate commitments to get the attention of the goods movement chain in between. It’s - in kind of simple terms, that’s been the work to date. Everybody needs to be moving in that direction. People are moving at different places. And different parts of the system are moving at different paces.
But if you look at the capacity needs, the continued economic growth of the country, in particular the consumer spending habits and the growth in container traffic, we have to be moving towards 24/7 as quickly as we can. And I’d point out even with what will likely be with - through the bipartisan bill, unprecedented investments on highway, rail, inland waterways, ports, dredging, everything that we need to do, there is still more that - there’s still more in the way of capacity that we’ll need.
And we need to unlock that unused (like) capacity. It’s as simple as that. So I think it’s a very valid point and we - moving towards a 24/7 supply chain, it’s been interesting to see some of the cargo owners, some of the freight forwarders be more nimble than others in kind of seeing the future and staking out that position now and, you know, capturing a customer base that’s anxious for it.
Rick Blasgen: That’s a great point, John. We do have a couple of questions in the chat, which I’ll just read for you. This is from James Haussener, who mentioned that your comments on (freight rate) plans to be more actionable. He asks, will there be direct federal funding to address the actionable items now, or will it have to wait for the bipartisan infrastructure bill?
John D. Porcari: It will basically have to wait for the bipartisan infrastructure bill. Right now states can flex their highway formula money as one example, to freight-related projects and multimodal projects. It’s, in fairness to the states, virtually every one of them has more need than they have funding today.
So the step-change in funding that the bipartisan infrastructure bill brings, is really essential because we have to get beyond just trying to preserve the system we have and maintain the system we have and in building a new generation of improvements.
And where the state freight plans really come in, is in at a very sophisticated way, they should be identifying those multimodal improvements that might be an inland intermodal container transfer facility; it might be truck lane capacity; it could be Class 1 railroad grade elimination projects. There’s a whole gamut of potential projects that are beyond the current financial capability of states.
But specifically, building for the future and laying that stronger economic foundation for the future through the (IIJA)s of the bipartisan bill, would be a really important down payment on a better future.
Rick Blasgen: Yes. This is Rick again. I’ll ask one more quickly, and hopefully have others who are teeing up questions there.
But regarding the state freight plans, John, we’ve talked in our committee for the last ten years, about these plans and how they need to work together to form regions. And obviously, have a 48 contingent state system of rail and highways and so on. Is there a methodology that you see in the future for state freight plans to come together and share what each state is doing?
John D. Porcari: Yes. That’s a great question. And so I would go back to my state DOT Secretary experience in Maryland. And for those of you who don’t know, it’s - Maryland DOT is unlike any other one in the country. Everything is under one roof. So the Port of Baltimore is, BWI Marshall Airport is. All of the goods movement parts are within that department.
In the state freight plan, for example, identified improvements all the way out to Ohio from Maryland for double stack clearance projects for one of the Class 1 railroads. And that’s by design, knowing that the issues, the bottlenecks, the project needs don’t stop at the state border. But, you know, in that case, West Virginia and Ohio had corresponding projects as well. So the basic economic units of the country are regions.
And so you do have to think beyond state boundaries, even for the really large states, to make sure that the interregional part of it is covered as well and the - and it’s truly intermodal. So, you know, we are talking about surface goods movement now. But air freight should be an integral part of the plan as well.
Rick Blasgen: John, this is Rick. I have a follow up to that on state plans. So many of our projects, what I call of national significance across multiple states, how do we prioritize those, especially with respect to infrastructure? And how do we get these states all working together to understand, you know, an expansion that might take place in Chicago has impact in an adjoining state, and getting the state freight groups to be able to understand and work with those larger scale projects that need to be done?
John D. Porcari: It’s a great point. And yet another portion of this bipartisan infrastructure bill actually has a program for projects of national significance. And you know, you might think about a rail freight tunnel or something as one dimension of it that serves an entire part of the nation or a multistate area. But it’s also true on the highway side.
So the Brent Spence Bridge, which is I-75 connecting Cincinnati, Ohio and Northern Kentucky, carries 3% of America’s GDP on it. And it’s a woefully deficient bridge with lots of issues, including capacity and safety. That’s - it may be the Ohio river connecting Kentucky and Ohio, but that’s a bridge of national significance. And in particular, for the auto industry, and the first, second, and third tier supplier networks, it goes all the way down to Atlanta.
So I point that out because the bill actually accommodates that. And recognizes that there may be very expensive, vitally needed improvements located within a state that are serving a multistate region. And there has to be a funding way that you recognize that no single state can carry the burden of some of those projects.
Rick Blasgen: You’re absolutely right. I got a text from Gene Seroka for the operator. Maybe open up Gene’s line. He’s got a question for John.
John D. Porcari: Okay.
Coordinator: Yes. Gene Seroka, your line is open.
Gene Seroka: Great. Hi. This is Gene from Los Angeles. First time caller, long time listener, John, good morning.
John D. Porcari: Good morning.
Gene Seroka: I’d just add I’m on my third term with this committee John, as you know, first brought in by Secretary Pritzker. This group of men and women does tremendous work in their day jobs and then trying to do their civic duty to help the agency and others with advice on what we can do in the supply chain.
So for this committee of my peers, John is doing this on a volunteer basis. Among his many other duties since leaving office, he has been kind enough to come back in at the request of the White House, with all his vast experience, relationships and friendships, to try to pull a lot of this work together over a six-month period; a Herculean task that we’re all indebted to John about.
And part of the story really unfolded last Wednesday in Washington. I had the privilege of working with John in meetings with the President of the United States, the Vice President, Secretary of the Department of Transportation, and the Director of the National Economic Council, along with CEOs of major retailers, freight movers, union leaders including our own Willy Adams, the International President of the ILWU.
So for those of us on the phone and on the video today, this has the entire power of the federal government and the C-suite of the private sector, behind it. And great thanks to John, for all of the coordination and bringing people together. There’s a lot at stake here, obviously. And in the short term as John mentioned, whether it’s getting goods to market, parts to factories, Black Friday coming up, Cyber Monday, the holiday season, think of the small retailer who imports ten containers to take care of payroll for their third-generation family business in Des Moines.
That’s what we’re faced with her. And I think this really is among all the other things that go on in Washington and that we see in the news or firsthand on the ground, it’s a call for unity in our industry. There are still some outliers; there are still some people with their own proprietary interests.
But with the work that John has laid out to the group this morning, and what he does every day in our four or five, six conversations that we have on a daily basis, we’ve got people moving in the right direction.
But let’s keep breaking down barriers. Let’s keep moving forward. Let’s get out of the way of progress with silliness and continue to focus on what’s in the best interests of the competitiveness for the United States of America. Rick, back to you.
John D. Porcari: Thanks, Gene.
Rick Blasgen: Thanks, Gene. For years I used to use the analogy of supply chains with - between the switch and the light there’s a wire and you don’t think about the wire until the light doesn’t go on. Then everybody wants to know what happened with the wire. So I think your comments are well taken and you’re absolutely right about that.
John, one more question. This one comes from John Gallagher. And he’s saying, some of the ports have asked for money to be released from the National Defense Authorization Act as an interim funding measure for labor and other costs associated with 24/7. He would like to know if that’s being considered.
John D. Porcari: First, Gene, thank you for putting an exclamation mark on what’s going on. You’re dead, right, exactly on. And we need to pick up the pace of the collaboration that’s going on right now. The NDAA - the short answer it is a possibility. We’re looking at every possible option. We want to make sure that we’re really rigorous and comprehensive in looking at options. It is not an easy one but it may be possible.
The reality is there has never been any federal operating system support as you all. And very limited capital assistance supports. And in fact, the Recovery Act in 2009, the stimulus bill is the first time that there was any federal funding of any significance for the land side of ports. And so we are looking at NDAA.
In fairness to the Department of Defense, they’ve been an active partner in all of these efforts, as has Commerce and Labor and Agriculture and other departments. The task force itself, which I know you all are aware of, is a Cabinet-level task force with the active vigorous involvement of the Cabinet Secretaries. So yes, we’re looking at that.
I think it is - it’s on the menu of potential actions. None of these are easy. And if they were, they would have been done before.
Rick Gabrielson: Other questions for John? We do have to make sure that they are short and concise, please.
Rick Blasgen: There is one from Brandon Freed). He’d like to know what more can the freight forwarders be doing to make your jobs, Gene and John, a bit easier.
John Porcari: Well Gene may want to jump in on this, but I would say utilize the night gates, the night operations at the ports of Los Angeles and Long Beach. You will see over time, other ports in the country being much more 24/7 as well. And the freight forwarders I think have a really important role to play because they can be some of the early pioneers that actually help build the volume to make it justified.
As we’ve talked about, this is not flipping a light switch. I think it’s more of like turning up the (restart) and we’re turning it as hard and fast as we can. But the freight forwarders could be a great help in that as well. And frankly, it’s a way to be more responsive to customers.
Rick Gabrielson: John, this is Rick. Maybe one follow up question to that. As you talk with the different stakeholders and we know that across a number of ports dwell time has increased for lots of different reasons. Any suggestions that you picked up from talking with ports or others, about measures that could be done to reduce dwell time on port?
John D. Porcari: Yes. There are - I don’t know how much time you have, but there are a lot of actually very useful suggestions. We should kind of go back to the problem statement. Part of what’s occurring on dock across America, not just at the ports of Los Angeles and Long Beach, but across America, is that they’re being used as warehouses right now.
There is a free or near-free storage for some of the largest beneficial cargo owners. And at the other end of the goods movement chain, the storage of containers and chassis is explained in part, by the containers that are not unloaded in a timely way at the warehousing and distribution end. And then everything in between as well.
So there are - anything that adds velocity to the system and in the short term, helps address some of our most acute needs and truckers are one of them, and it’s a tough job; it is in many cases, not the most desirable job, so the industry loses truckers to other occupations.
But the understanding and being helpful on the working conditions for everyone involved in the goods movement chain, as we’re asking them to work more hours, to work nights, to do more, is I think something that everyone can help with.
Coordinator: Excuse me. We have some questions over the phone queue.
Rick Blasgen: Sure.
Coordinator: Our first question comes from Gene Seroka. Your line is open.
Gene Seroka: Great, thanks. And thanks, John, just for the follow up for Brandon’s question. I was just talking to some of the union guys last night, and they said while it’s all great that you guys are working around the clock with so many business interests, don’t forget the little guy. And I think that our work with the Los Angeles forwarders and brokers association of (Vince Iacapella) as well as (Rich Roche) at the national level, we have never forgotten the small to medium sized importer and exporter.
So your work in that sector also can spread the dialog across a vast portfolio of these middle-sized companies and smaller folks that really make up the heartbeat of the American economy. You also represent very big companies. And making sure that they have access and a seat at the table to bring these ideas. And bottom line, as Rick Gabrielson was just saying, we’ve got to move this cargo.
The dwell times are just off the charts, whether it be on terminal or out on the street for a variety of reasons, some of them just knots in the system, others because folks have ordered a lot of cargo. So keep working through your portfolio; bring to us ideas, suggestions, or needs. And a lot of this right now is quite honestly as John said, it’s segmenting the cargo away that’s just in case.
And we finally began to have a pretty real dialog with the retailers and others last week, that if the cargo is not needed right now - lounge chairs, eFans for next spring, push it aside for now and let’s get the toy products, the healthcare products, the PPE, the factory parts that need to go to the OEMs in Detroit, let’s get those out now.
So Brandon, I’m happy to talk to you offline. But that’s kind of our mindset. It’s all of these ideas running in parallel fashion, but not losing the prize and the people that have to get their product to market.
John D. Porcari: Well put Gene, as always. And it’s a really important point here that the work with the large cargo owners is specifically designed to bring the volume commitment that unlocks the doors, for everybody. That aggregating that demand with some of the larger cargo owners, benefits everybody. Our small and medium sized firms in particular, but by opening the gates, opening the hours of operation for everybody.
Rick Blasgen: I think Melzie Wilson had a question. Can we open up Melzie Wilson)’s line?
Coordinator: Melzie Wilson, your line is open. Go ahead, Melzie Wilson. Your line is open. Please check your mute button.
Melzie Wilson: Hi. Good morning, John and everyone. How are you doing?
John D. Porcari: Great.
Melzie Wilson: John, I represent the National Customs Brokers & Freight Forwarders Association as well as Dunavant Logistics Group here in Memphis, Tennessee. When we look at this potential 24/7, going into this our clients - we’re trying very hard to move the freight out and give the ports some relief, as well as the rail yards, relief.
But what our problem has been since the pandemic, has been labor restrictions, our labor constraints due to COVID. And so - and in some cases, the supplemental checks that the American people have received. So I think that’s one of the core issues, is having the capacity, you know, if we’re struggling in the regular course of an 8-hour day it’s going to be hard and maybe John Gold with the NRF can probably speak better to this, but it is a constraint.
We have clients that normally unloaded 20 to 30 containers a day that for a period of time were only able to maybe do five containers a day.
John D. Porcari: Yes. It’s a good point. Across the board there are labor constraints and I would first point out that throughout the pandemic people in our goods movement system were actually frontline workers. And we should take a moment and recognize that. The ILWU lost about 20 workers to COVID during that, and everyone kept working and working more hours than ever.
And it’s again, truth through the entire chain, but this is not going to happen overnight. It will happen and it will happen as labor availability, as one of the limiting factors, allows it to. So we understand that and it’s not unique to the goods movement chain across America. I think we’re all realizing that the value of labor and what we need to do to both attract and retain the talent that we need.
Melzie Wilson: Correct. Correct. I think our whole industry is looking at that perspective. Thank you.
John D. Porcari: My pleasure.
Coordinator: Our next question comes from Roger Guenther with Port Houston. Your line is open.
Roger Guenther: Thank you and good morning, John. Thanks for joining us today. I had one brief opportunity with you before, with some more of the port directors around the country, to…
John D. Porcari: Yes.
Roger Guenther: …talk about our challenges. I appreciate you opening up for that. You know, I just want to - I’m not going to reiterate some of the questions Rick and others have addressed. You know, dwell is the elephant in the room for ports and terminal operators. We get that. We have to continue to find a way to move those through. You know, and something that Gene mentioned, and I think it’s something that we have to not forget.
LA, Long Beach obviously 40% of the cargo coming from Asia. That’s a challenge there. But the health of all the ports in the country, you know, and being efficient and having that velocity, is very critical. We’re the sixth largest port in the country but we’re not immune to the challenges, maybe not to the scale of what you’re seeing on the West Coast, but just - I haven’t heard mentioned and maybe it was, you know, there’s not a short-term solution to the trucker issue that, you know, this is nothing new.
You know, the supply of truckers has been an issue and it’s getting worse. You know, somehow we have to address that. But the other thing, and I can speak for Houston, you know, we’ve got to get out of the mode, you know, and again, I think it’s very important for the health of all ports about hey, we’re competing with one port or another.
Some challenges that we have and that we can address those with our state freight plan too, as well, is, you know, we don’t rail anything out of Houston. And I’m just using that as an example of, you know, if you’re going to take trucks off the road, we have to have those opportunities, and there are reasons for that.
You know, the Class 1 railroads have a say-so in when they go. So but we have to look at all of that as part of the system and - but as far as infrastructure, I’ll just leave with, you know, we have planned, you know, we’ve built 20%, 25% of the - ahead of the demand curve.
I had, you know, more than 100 acres of available land six months ago planning for the future. Not planning for this event, but we have to include those inside the gates at the port, at every port in the country, to make sure that we’re prepared for the resilience of this supply chain.
So anyway, I appreciate you listening. And whatever value we can add we’re here to comment.
John D. Porcari: Well, thanks, Roger. And I mean first of all, thanks for looking to the future in terms of land needs and thinking further out. Because we - collectively, we don’t do enough of that. And I think opportunity comes from every adversity and we shouldn’t let this crisis go to waste. And one of the ways that together we can actually make a difference, is to rebuild differently and stronger and more resiliently.
And there are a lot of great ports in America, and I know we have ocean carriers that are looking at routes and vessel strings right now with an eye to resiliency. And we need to make sure that the systems are fluid in the future too. That we tend to trip up on the handoffs, to the intermodal handoffs and in other parts of the system. And again, better data helps us make better decisions on that.
But let’s all agree that we should be rebuilding better and doing better in the future, in a way that drives the economy rather than potentially holds it back. I’m going to have to apologize in about two minutes here because I’m going to have to jump to another call. But this is a great group. As I mentioned before, I’ve really enjoyed working with it in the past.
And you are kind of a 360 view of the goods movement chain and - with an eye to making it more competitive. So I appreciate what you’re doing. And you know, let’s step it up. Now is the time.
Rick Blasgen: John, on behalf of our committee, thanks very much for addressing us. We went over your time; we had a lot of great questions here. And I think your comments were thought-provoking and dead on. So we really appreciate the work that you’re doing on behalf of the country. And thanks for spending some time with our committee today.
John D. Porcari: It’s my pleasure.
Rick Gabrielson: Thank you, John.
John D. Porcari: Talk to you all soon.
Rick Blasgen: Thanks, John.
John D. Porcari: Take care. Bye.
Rick Blasgen: Okay. I think we’re ready now for our Customs and Border Protection update. I think Craig Clark is with us from the Office of the Commissioner Office of Trade Relations. Craig, are you with us? Can we open up Craig’s line? And I’m not sure if Valerie has joined or not. We’ll turn it over to you guys.
Valerie Neuhart: Hi, there. It’s Valerie. I’m here. I’m trying to open my video. I don’t know if I’m there.
Rick Blasgen: We can see you.
Valerie Neuhart: Okay, great. Thanks for having me. And I believe Craig is here too. I’m looking - I think - yes, Craig is online as well. So I’ll go ahead and start out. Thank you all for having us here. This is a very insightful session for us. Just to share where we are and try to address some of the ACSCC questions, or even thoughts around CBP, on the cargo and operations side.
So I will share - I’ll be very transparent here, that we usually push Richard, Richard Boll, for well what do they want to hear, you know, kind of thing. So we put him on the spot. And you probably hear from him respectively, just because we ask him so many times, well what would they like to hear from us. And as you know, I would say that topics and very high-end operations are usually on the forefront of the news.
So we’ve been in the news a lot lately. So we’re hoping that our time today will just kind of give you a snapshot of where we are. And with not only some of our engagement lists, our stakeholders, but also on some of the few things that we heard from Rich that the members were most interested in. And one of those is ACE 2.0.
I’m going to start that first and carry onto another topic, and then I’ll hand it off to Craig, for the remainder of our time. But I do want to emphasize one thing about ACE 2.0. For those of you that might not be familiar, we’re taking on and initiating the acquisition process for a new platform for ACE. And as many of you know, we had a pretty lengthy modernization effort to move from our current legacy system, our legacy system into a more modernized platform. And that was our ACE environment.
Well that has been some years now and as you probably all know and are very aware, you know, it’s challenging at times to keep up with the technology changes and advancements. And so I want to emphasize two things - one is that the ACE 2.0 effort is conceptual. We are working feverishly, behind the scenes, to get our thoughts around what that effort may look like.
And then the other is that we plan every step of the way to be engaging our trade stakeholders and our (PGA) partners as well. So we are looking at what an overall development for ACE modernization would look like. We’re coordinating those efforts with the COAC, once the COAC reconvenes, which should be fine because the timing will - we’re looking at around the next year.
And as you may all be aware, that there were some reimagined entry type efforts going on that kind of dovetails when our 21 CCF legislative changes as well. But we were really looking to collaborate with the industry. We received some recommendations from industry.
And we are now in the process of identifying gaps. Like where in the processing are we experiencing gaps between our legislative fees, between how we have our processes identified, what we require of our industry partners, and then the system as well.
So I want to share, you know, ACE was to move to a more modernized platform. And now that we’re looking to modernize ACE, you know, we really want to be more inclusive of modernizing our processes and also creating efficiencies on the overall - throughout the overall supply chain. So the only thing I will add is that we do - one of our goals is to simplify our data structures themselves. And we definitely want to reduce data duplication in what’s submitted to CBP.
Again, you know, to create some efficiencies not only for ourselves, but also our partner government agencies and our industry partners as well. So you’re probably thinking okay, all great. But as I mentioned, it’s conceptual. We’re still kind of noodling out what ACE 2.0, a modernized ACE system would look like for us. And then we’re looking into next year to start having these conversations with industry to say, what could that be? Help us identify the gaps, which I said, we already have some recommendations from industry on.
And, you know, we’re looking at very specific cargo processes entry collections, exports, post-entry, post-audit. So we’re really looking throughout the transaction lifecycle. And as I mentioned, exports is in that landscape, so I will segue into export modernization because we do fear that there may be some interest on what our export modernization efforts.
And I think at the point in which our COAC had submitted an export modernization white paper, we are quite thrilled about that and we have shared that with this group at one of your prior public meetings. And that is online. So if any of you are interested, we can share that link to that document. I can provide that to Rich to share with all of you.
But the thing that’s most important about that white paper is that we’re really absorbing that right now. We’re digesting it; we’re really picking it apart, making sure we understand what was intended by industry on the modernization efforts that are represented within that white paper.
And we’re hoping then once the COAC reconvenes and we have all of the new members onboard and we start their new term, we will be sitting down with them again to look for some ore finalized recommendations on the export modernization process.
So we have that big white paper on modernization; we’ll sit down with our industry partners again, to noodle out some very specific procedural recommendations. And so right now I would say generally speaking, CBP is working hardest on the export manifest process. So that we are ready to have those conversations with COAC once they reconvene.
We’re also looking very closely at the alignment of data. And we’re taking a very strong, hard look at the duplication of data that’s submitted and what that could potentially look like. And that’s it for export modernization. So I’ll hand it over to Craig.
Craig Clark: Thank you. And good morning, everybody. It’s always good to be here. This is a good group. So I’ll give you a rundown on some updates regarding the 21st Century Customs Framework, 21 CCF. I know there is some interest there. And for those of you I’m pretty sure some of you are even part to the task force. But for those of you who might be new and not know about it, it’s just an initiative that the comprehensive modernization effort.
It’s got in their policy, regulatory, statutory changes. And all that’s meant to position CBP and partner government agencies and the trade and just in a better position for the future trades. You know, it’s a system where we want things to move faster and more securely across borders, making sure the safer products are included. Of course, ethical production methods are used throughout the supply chain, and of course we want to remain a world leader with innovative trade practices.
So some of that modernization progress can be made like we had just said, through regulatory and policy technical changes. But really legislative updates are going to need to be done to really unlock that reform, that 21 CCF kind of envisioned. And to that end, CBP has drafted some early starting point 21 CCF legislative discussion drafts.
They are structured around what the agency views as the biggest impediments to the trade modernization effort. And since 21 CCF is a joint government and trade effort, you know, we are committed to collaborating with the trade to achieve that vision. You know, we’re going to have to address modern challenges, you know, leverage some of those emerging efforts (interviews), and long-term change. And all of that is going to require collaboration with the trade.
I mentioned the task force. That is the 21 CCF task force that was stood up under the COAC. They review legislative discussion drafts that are aligning with the challenges that the CBP lists within the 21st Century Customs Framework. Part of that - I think some of you are going to know this because you’re part of the task force, but it’s - the task force comprises of brokers, importers, exporters, you know, express carriers, sureties, marketplaces, a big cross-section basically, of small, medium, and large sized businesses.
CBP has solicited and discussed industry feedback on those initial discussion drafts and have taken some steps to incorporate the feedback that we’ve received. Let’s see. We got some inputs based on some inputs from CBP, to trade (PDA)s and the like - 21 CCF has been organized now around five key pillars - the restricted data collection, limited data usage, narrow visibility and accountability, untimely and ineffective enforcement, and the perennial favorite, insufficient funding. To date CBP has completed discussions for three of those five challenge areas - restricted data collection, limited data usage, and narrow visibility and accountability. Of course, we’re looking forward to discussing ineffective and untimely enforcement, which is the fourth challenge area. There has been a smaller subset of subject matter experts within the task force.
They’ve kind of moved into a subcommittee called the 21 CCF Focus Group. They’re going to develop recommendations whether and how to incorporate the feedback that CBP has received, and then report those recommendations back out to the task force and then up to the broader COAC. So of course, we’ll keep you in the loop and give you updates as we get them.
And then a point that we’ve made from the 21 CCF folks, is that in order for the US leadership of trade to continue over maybe bad actors and competitors like China, we have to bring government and industry together to address these new and emerging trade challenges. China is making strides to dominate emerging tech standards, which will put the US at a significant competitive disadvantage, putting, of course, American businesses, consumers, and our economic security, at risk.
So we’re hoping that large scale efforts like 21 CCF that affect basically all stakeholders, that it’s, you know, it’s going to be difficult to come to a final product that feels like a success for everyone. So this is why this continued engagement with industry on these trade challenges and getting your perspective and input, it’s just we feel like that’s the best way to address them.
So that is my update for you guys, for 21 CCF. And I know that there were some questions about USMCA. So I will roll into that and just kind of keep you posted there. We are of course, continuing to be instrumental in the implementation and by we, I mean CBP. And we’ll continue to be instrumental in the implementation at USMCA, entered into force there back in July of 2020. So we’re like what, 15, 16 months into that trade activity.
So far, it’s about $648 billion in USMCA preferential treatment clients have been entered. That’s mostly heavily concentrated in the automotive and agricultural industries. And then of course, because we are the primary US government agency for implementing USMCA, CBP works very closely with our partners - the Department of Treasury, Labor, Commerce, USTR. All that to ensure the comprehensive (unintelligible) implementation CBP, those cooperative efforts contribute to the enhancement of the US global economic competitiveness by enabling legitimate trade and travel.
And the USMCA Center, which is always very helpful, they continued to educate and train internal personnel providing consistent and comprehensive guidance, leading enforcement efforts that support CBP’s mission of fostering economic security through lawful international trade and travel. They remain actively engaged with CBP stakeholders to address and resolve policy questions and to support the development of time sensitive regulations, drafting process.
So, you know, if you have questions of course you can always go through USTR, but you can contact CBP USMCA center directly through USMCA@CBP.DHS.gov. And there’s a lot of good information there on CBP.gov as well. We have also heard through the grapevine, that there are some questions regarding staffing or some issues regarding staffing at the ports of entry.
I can update that CBP is working to address staffing and attrition at the ports of entry. COVID-19 sort of changed everyone’s world and for us it forced a reduction in basic academy seats in FY ‘21. So that limited the number of training seats that were available for officers and agriculture specialists. But the good news is that hiring is ahead of attrition. And CBP ended FY ‘21 with approximately 300 more officers onboard than at the end of fiscal year ‘20.
So in fiscal year ‘22 that we just entered, it’s a priority for CBP to get those who had already been hired and vetted, into the training pipeline, including using virtually delivered training. So we’re pushing for that. This issue of course came up with our last speaker and I know it’s on everybody’s minds, congestion at the ports.
I did just want to kind of report very quickly that CBP is always working very closely with the ports and the port authorities. The Office of Field Operations so very well-positioned to assist when and where they can. And they’ve even been supporting operations in some ports where the port hours have been extended to try to work through the backlog.
And I’ve heard related to this issue, just in the last few days, an issue regarding the import of security filing and some penalties that were being experienced. And I might ask for more information specifically so that we can get good info here, but - good info to you guys. But most of the port congestion issues seems to be tied to the arrival time of the vessel.
And, you know, the ISF is required 24 hours prior to loading in the foreign ports. So I’m not - this was brought up in the context of congestion, but I’m not necessarily seeing the connection because of just the limited information I got with this. But US-based congestion shouldn’t be an issue for ISF. So, you know, we want going to talk about that a little further, so we’ll be in touch.
But, you know, the ports always had that discretion, whether or not to issue a penalty for the ISF violations. So, you know, we would encourage you to contact the local port as well and just kind of work through the issues. You know, when we can identify issues like congestion and other major events that cost violations, we usually just go out and advise and strongly encourage the ports to use their discretion and to work through the issues with the carrier and importers.
But we’ll also work with carriers and importers at the HQ level and advise them on ways which might be able to, you know, sort out your process or address the issues that you’re having. So - like I said, if you’ve got something specific to go on then, some questions or scenarios that we could get, you know, kind of review we could get back to you and, you know, OTR would be happy - I would throw a call together for you guys and, you know, get the right (unintelligible) folks on the line to talk to you about that.
And with that, that ends my update. So - any questions you guys have?
Rick Blasgen: Well, thanks, Craig and Valerie. If we have questions I know there was one in the chat, from Jonathan Gold but I think Craig’s addressed that. It was about how CBP is helping to support the operations at the ports and you did discuss that. Are there any questions that folks have on the line? Operator, we’ll be on the lookout for that, or in the chat.
Rick Gabrielson: While we may be waiting for some, Rick, maybe Craig, a follow up question talking about staffing. Have any of the shortages in staffing, whether it’s Canada or ports or even Mexico - have any of them caused any delays for shippers moving cargo is the first one; and the second piece with adding so many new officers coming onboard, in any job there’s a learning curve. And do you anticipate any delays or challenges with that as, you know, new officers kind of get ramped up from an experience standpoint?
Craig Clark: So - to answer your first, the first part of your question, I would say just being frank with you that the sort of entry side of the trade scenario is not the problem. So - there might be much of an impact from the CBP perspective, to a slowing down of (unintelligible). We’re very ready to process and enter cargo. So - I don’t think that CBP is contributing much to that slowdown.
With regard to the training, obviously the training is very comprehensive and good. And, you know, like you said, there’s always a little bit of a learning curve. But the officers who are in the field are never, you know, they’re with experienced officers as well. And so, I don’t think the training is going to be seamless for you.
Rick Gabrielson: Great. Thanks.
Valerie Neuhart: Hey, this is Valerie Neuhart with CBP. And I’m just going to add to further Craig’s response. You know, once they are assigned to their port assignments, they continually train. They go through on-the-job training and they have, you know, other officers that they shadow. So it’s not like we just throw them out there. So, yes.
Rick Gabrielson: Good point. Thanks. I didn’t mean to assume that they just threw them out there. But again, someone who is in the field for ten, 15 years versus their - even though they’re well-trained and they’re new in the role and new in location, sometimes there’s a bit of a ramp up period.
Valerie Neuhart: Oh, understood. Not - it was not an accusatory statement at all. But I will share, you know, on top of even the introduction of new employees, you know, there is a rotation cycle within the ports and the field offices, right? So, you know, we are very, very cognizant of having to ensure the readiness of our folks.
So yes, I mean and, you know, and that’s for multiple reasons the way they rotate. But yes, so in addition to, you know, onboarding new folks and their entire, you know, the breadth of their full training cycle and onboarding cycle, once they are at their given port of entry, you know, we also - we’re also dealing with these rotations that many of you are aware of.
Rick Gabrielson: Thanks, Valerie. Questions from the group?
Coordinator: We do have a few questions over the phone line. Our first question comes from Jonathan Gold with NRF. Your line is open.
Jonathan Gold: Great. Thank you. Val and Craig, thanks for always for CBP. Craig, just real quick on the ISF penalty issue - I’m trying to get more information from my members, but a few have indicated that you call the disruption dislocation that’s happening, especially with the vessels being off location, that dates are not matching up with what’s on the ISF. So that’s one of the challenges that people are facing, even the departure dates somehow get wrong on the arrival dates, even though the vessel is technically, you know, an anchor for the (unintelligible).
So, you know, those are some of the challenges that people are facing. So I’m going to try and get some more information to share that with you guys. But I think any (unintelligible) get to the field to, you know, show discretion during the challenging times, would be very helpful for folks.
Craig Clark: Thanks, John. I appreciate that better insight. And any kind of scenario that you might have as an example, would be helpful when we go to OFO, to discuss this. But yes, I appreciate that extra info.
Jonathan Gold: Yes. Yes. (Unintelligible) some details.
Coordinator: Our next question comes from Norm Schenk with NT Schenk & Associates. Your line is open.
Norm Shenk: Okay. Thanks, everybody. And thanks, Val and Craig, for the updates and joining us as usual. Our committee had a meeting on customs issues and then we had an offline call a little bit before this meeting here, to talk about a few things to try and separate what we should talk about, what we’re going to talk about later on in the committee meeting.
So, you know, first, Val and Craig, we appreciate you addressing the specific questions that were submitted with respect to staffing, port congestion, and ISF and it was really helpful, you know, to get that. And we’ll take on the ISF, you know, CBP has generally speaking, been pretty open in the past when there are extraordinary circumstances to be flexible in that.
So not just John but any others, you know, if you have specific information it’s always better to, you know, work locally first. But if not, then we can come back to headquarters and see about getting some policy issues on that. We had - on our call with CBP we did touch base on a number of issues that aren’t on - if you’re wondering why they’re not on the call I’m just going to mention it and I’ll talk on our committee report later.
But (unintelligible) little bit more on the customs modernization, the MOD Act 2 in-depth on that. And then there were a couple of very specific topics of concern to our members on the global business identifier and the data model. So - I’ll talk more on those on our committee meeting, in case anybody’s wondering why they didn’t have enough (unintelligible) on that.
We agreed to agree that we need a little more discussion on it, so we didn’t feel like it would be helpful to, you know, take the extra time this morning on those couple of things. But again, Val and Craig, thank you so much for joining us and the good updates. And that’s it for me.
Valerie Neuhart: Thanks, Norm. If I may, you know, as you have those discussions with your committee, you know, and don’t feel like you have to wait for this quarterly cycle. Right? I mean I just want to encourage you as you get your thoughts together with the committee members, to reach out to us and, you know, we’re happy to try to address your questions or even come speak to your group if that helps, or get the right subject matter experts engaged depending on the level of detail you’re seeking.
So we’re happy to follow up in that way. So please don’t hesitate. And I know you have my number and Craig’s number. And I know you know where to find us. So don’t be shy.
Norm Shenk: We do. Thanks.
Coordinator: Our next question comes from Melzie Wilson. Your line is open.
Melzie Wilson: Hey, Val. How are you?
Valerie Neuhart: Hi Melzie. I’m good. Good to hear your voice.
Melzie Wilson: You too. Question for you - as customs brokers we are trying to work with our means of transportation to ensure that our importers of record are not paying the duty way beforehand. And as you know, the supply chain is heavily delayed. And sometimes we only - we may think something is moving and find out too late to move it on the statement, that the freight’s been delayed and so therefore, you know, you have a company who may pay their duty which could be very high, way before they’re even able to put them on the shelf to sell, or to well them to another party.
I know that (Mary Jo) and the customs committee was going to bring that up. Have you thought further about this and allowing us a little bit more time to push the statements out for payment?
Valerie Nuehart: So we’ve had some preliminary discussions with some of the NCB FAA members on the customs committee, but I think if you can share some very specific examples with, you know, with us then…
Melzie Wilson: Okay.
Valerie Neuhart: …I think that would be helpful. Right? It’s always good, and I know Craig said the same a few moments ago, but, you know, if you - you shared some very specific examples. It helps keep, you know, kind of the details…
Melzie Wilson: Right.
Valerie Neuhart: …in check for us. Right? And then…
Melzie Wilson: Right.
Valerie Neuhart: …we can address them. And if it’s a larger issue it helps us diagnose what the issue may be, and how…
Melzie Wilson: Okay.
Valerie Neuhart: …we can possibly either avoid it or, you know, make some modifications if need be, either a process side or on the technical side. So if you - it sounds like you might have a few of those. So that would be great if we can get those. And then…
Melzie Wilson: Okay.
Valerie Neuhart: …we can pull the right folks into it.
Melzie Wilson: Okay. And I think probably John, your members can also speak to that as well. So - I’ll go back and ask for a bulletin be sent out among our members and get some examples for you. Okay?
Valerie Neuhart: Yes. And I will follow up from our - we just had a customs committee meeting with the NCB FAA customs folks, which you know. We did that…
Melzie Wilson: Right.
Valerie Neuhart: …what, two weeks ago or so?
Melzie Wilson: Right. Right.
Valerie Neuhart: Maybe I think two or three weeks ago. In any case, I think we’ll go back to follow up with - internally with the CBP folks, to just see how much of that issue surfaced and if we’ve done anything, you know, any legwork on the back end to kind of address…
Melzie Wilson: Okay. Yes.
Valerie Neuhart: …it. I’ll do that and then you put some samples together. And together we’ll…
Melzie Wilson: Okay.
Valerie Neuhart: …come up with something.
Melzie Wilson: Sounds wonderful, Val. Thank you. And I appreciate everything.
Valerie Neuhart: Thank you. Thank you. Take care. Thanks.
Coordinator: I show no further questions in the phone queue.
Rick Blasgen: I don’t believe that we have any in the chat, either. So Rich or Heather, Valerie, Craig, any final comments? I really appreciate your time today. It was a lot of great information. Anything else that you wanted to cover or ask about?
Valerie Neuhart: This is Valerie, again. I would just want to further emphasize that you can reach out to myself, to Craig, to any member of the Office of Trade Relations team and, you know, as your committees have these discussions around matters that integrate with CBP. And we’re happy to have, you know, some offline discussion or I see Rich talking and I should probably turn my video on. You know, we’re happy to engage with your members and have some follow-on dialog.
And whether that’s, you know, an educational, just a brief kind of status or if there’s anything that we can do to help either curtail some challenges or issues may be experiencing, particularly where some of these larger things impact so many. You know, we are on the forefront of those issues and we are not shy about it. So we want to make sure that we make ourselves available to have conversations with committees like yourself.
So I just want to extend that invitation to reach out to us direction or through Rich, whichever is appropriate for your committee. And we’re happy to come have some follow up dialog with your committee members, with your subcommittee groups or if there’s, you know, anything even if you want to send these things in email that we can help with we’re happy to do so.
Rick Blasgen: And Val and Craig, you know, as you already know, you know, we work very closely with you and I appreciate your openness and your willingness to be able to do these meetings and others. And we definitely realize the importance of you being able to come in and give other I guess you want to call it briefings, or updates, and stuff like that to our subcommittee. So I do appreciate that. And it’s nice to have someone that we can work with hand-in-hand (unintelligible). I appreciate it.
Valerie Neuhart: Excellent. Thank you. And I hope you all stay safe and well. So we look forward to our time together again.
Richard Boll: Hopefully, we’ll be able to do some lunch at some point. We’ll see.
Valerie Neuhart: Yes. I’m looking forward to those in-person days, guys.
Richard Boll: I know. So are we. So are we. Okay. Any other questions from anybody? Okay. That’s fine. And I don’t know if our next speaker’s on as of yet. Has anybody seen if Jim Cafone is on? I just checked a little while ago. Let me double check. I don’t see him. I’ll give him - send him off an email just to be on the safe side.
But what I can do is I can give you little updates on what’s going on with our committee. And I’ve mentioned these before but I should probably repeat them as well. Our rechartering process is going to be hopefully coming to a close in mid-November. So hopefully by then we’ll have them rechartered for another two years to go through the - to 2023.
I already have the approval from the Secretary. And it’s just a matter of getting the paperwork through to the people that need to see it. So we have good progress on that. And it kind of goes on with that hand-in-hand. During that time we generally do after that maybe in January or February, we’ll do a Federal Register notice to actually ask or to solicit other people that want to apply for membership on the committee.
We’ll have a number of positions open. And so people look for that Federal Register notice. I’m assuming it’s going to be January or February. So keep that in mind if you’re interested in applying for some of the openings that we may have. We don’t have any, but with that said, we definitely want to get new blood on the committee as well. So, you know, just keep that in mind.
And those are pretty much my two big things I had to say. Does anybody else have anything else you want to add? I’m going to try to get a hold of John, just give me one - Jim. So just give me one second.
Rick Blasgen: Okay. Maybe check with operator to see if she sees him out there as well. Yes, Valerie (Coordinator)), do you by any chance, have any - can you see Jim Cafone by any chance, on your…
Coordinator: I do not.
Richard Boll: Okay. I’ll be back.
Rick Blasgen: While Rich is locating Jim, I’ll invite everyone - Jim had contacted to us at CSCMP, for our annual conference that we did have in-person in Atlanta last month. And he gave a presentation about how Pfizer took the vaccine to market. And it was a fantastic presentation on supply chain, and he’ll go through that. But he really got into the details of what went on and how he was able to do that.
So we asked him to sort of reprise that conversation here. And I think you’ll be amazed at some of the things that they were able to do in a very, very short period of time obviously. So it’s a true supply chain success story behind the scenes, as to how all that occurred. And it’s a pretty fascinating. Glad that he agreed to join us. And hopefully, he’ll get on here and we can spend a little time reviewing that.
Rick Gabrielson: (Unintelligible) where is he based out of?
Rick Blasgen: He’s on the East Coast, Jersey I believe where Pfizer’s headquarters are, I think, maybe New York.
Richard Boll: Yes. I think he’s in Jersey. I think his bio said that he enjoyed fishing off of the East Coast. So I’m assuming he’s stationed there.
Rick Gabrielson: Maybe while we’re waiting does anybody in the group have any questions for either Rick or myself or Richard or Gene or Heather, to address?
Coordinator: Mr. Cafone has joined.
Rick Gabrielson: Oh great. Never mind.
Rick Blasgen: Perfect. Can you please put him in, please? Thank you. Jim, can you hear me okay?
Jim Cafone: I sure can. Yes, I can.
Rick Blasgen: It’s Rick Blasgen, Jim. Thanks very much, for agreeing to join our group today. I explained to them about your presentation in Atlanta at our CSCMP conference and how you blew the audience away with a great supply chain success story. So I’m going to briefly introduce you and then turn it over to you. We really want to get as much time with you as we possibly can. So -thanks very much, for addressing our group.
Jim’s the VP of Network Design & Performance at Pfizer Global Supply Chain, Pfizer Global Supply. He pretty much is responsible for just about almost every aspect of supply chain and certainly looks to his peers in making all of the things that he’s about to tell us happened. So - he was responsible for the global manufacturing network design for the (unintelligible) Pfizer COVID-19 vaccine.
So Jim’s history - he’s worked with Ford, PricewaterhoueCoopers, Wyeth Pharmaceuticals, as well as Pfizer. A lot of senior positions in manufacturing and supply chain planning, customer order management throughout the entire supply chain, basically. He’s got several degrees - a BS in Industrial Engineering and an MS in Mechanical Engineering from the University of Rhode Island.
And he has a MS in Technology Management from the University of Pennsylvania College of Engineering, the Wharton Business School. Then he takes lunch. Anyway, Jim, thanks so much for addressing our group. This committee has been around now for ten years. Its goal is to advise the Administration on what the country needs to do from a supply chain standpoint to maintain and increase its competitiveness on the global stage.
So without any further introduction, Jim take it away.
Jim Cafone: Okay, great. Great. Rick, so you can - everybody can hear me hopefully, correct?
Rick Blasgen: We can.
Jim Cafone: Awesome. Awesome. And then I’m trying to figure out how to use the camera. I don’t know if the cameras are in use or not. But if - let me just try one more time. There we go. Hopefully, that’ll start to come through.
Rick Blasgen: Yes. We’ve got you.
Man: Here we go.
Jim Cafone: Great. Fantastic. Thank you very much. So first of all, you know, Rick, everybody, thank you very much. I’m delighted to be here at this event here. And, you know, I just wish everybody a good day. And, you know, what my goal here is, I guess, in maybe the next 30, 35 minutes, is talk to you quite a bit about, you know, Pfizer’s experience with our own race for this COVID vaccine.
And I’ll talk to you, quite a bit about a lot of the great work that we were fortunate to be put into, to execute as it related to, you know, solving probably the greatest healthcare crisis in the last century. What I’m going to talk to you here about is basically the supply chain side of it. Okay? So we’ll talk quite a bit about how Pfizer went about not just the scientific aspects, but to basically build what I would classify as a world class supply chain in a matter of months, world record time, in order to support this pandemic that we’ve had.
So, please stop me wherever you see fit. And what I’ll do is try to do my best to leave a little bit of time if there’s possible, for some open questions. If you move to the next slide, and what I wanted to do is just at least set the framework here for you, right? And it’s - the best way for me to do this is I’m going to bring you back to January of 2020, right?
So it’s pretty clear at that point in time, based on sort of what we were seeing within our own Pfizer network and what we were seeing sort of on a world stage, that there was a healthcare crisis coming at us, right? And the challenge here with the healthcare crisis is, if you remember the - I’ll talk about it here in a few moments, but, this virus had not necessarily been fully understood even in, you know, the middle of January timeframe, right?
It had - the DNA of the virus had just been uploaded. And, you know, we really had quite a bit of a problem, and a complex problem, from a manufacturing supply perspective. And what we were talking about at the time within Pfizer, is where can we contribute to this global healthcare crisis? I always use the words contribute. Never in the words of Pfizer, were we ever talking about what I would classify as, you know, the word - using the word compete.
We were never talking about compete; we were talking about where we can contribute. And the question always is, is where do you want to contribute? Do you want to contribute on the front end of this pandemic, by trying to provide therapies that would be prophylactic in nature, which is a vaccine is prophylactic in nature?
Or do you want to be contributing on the back end with some of our, you know, unique science as it relates to, viral suppression, viral inhibitors, and other sorts of medicinal therapies? And depending on where you want to be in there, really dictates your volume and dictates what kind of supply chain that you need to build.
If you’re going to build a supply chain for vaccines, the global population is 8 billion people just to use round numbers. You know, you’re talking about billions and billions of doses. If you want to be on the back end where you’re treating some of the symptoms and really when the disease is taking hold, you’re dealing in a lot less volume, but you’re also dealing with a lot more complex sort of impacts to health.
The other thing we had to do, really also, is in - is really think in terms of patient. You know, in the pharmaceutical healthcare industry quality is not negotiable. Quality is accepted. There’s one set of standards that we utilize obviously, in the United States. And those standards are by and large, the same sorts of standards that you’ll see anywhere on the world stage within modern countries.
So we had to think in terms of obviously patient first. And then the other challenge that we were facing obviously, was how do you build a network in parallel while you’re paralleling yourself right to the speed of science? How do you build a supply chain that can only go as fast as the speed of science? And what we’ll talk about here in a few moments is if you look at how we solve this, is we use a unique technology, which I’ll speak about in a few moments, which is a new vaccine platform called mRNA vaccine.
And I’ll talk about that in a few moments. If you go to the next slide, then, what you’ll see here is unfortunately, time was really against us. Okay? And by the way, it wasn’t just against Pfizer, it was against sort of the US and the world population, right? Vaccine development typically, and you can see some of the therapies here and some of the, you know, from when the first animal studies were initiated all the way to what you would call eradication, right, is it’s measured in years.
In fact, if you looked at, some of the latest press from, you know, if I, you know, the best source I would use for - in the public domain for vaccine design, would be the Johns Hopkins Centers for Medicine, the medical school. And they’ll tell you that a vaccine takes anywhere between five to ten years. And the reason why is that, it’s just inherently difficult and challenging to do it, is fundamentally what it is.
So as we were as Pfizer, moving forward with where we were going to try to contribute to this global healthcare crisis, the first thing we did is if I move to the next slide here, is our CEO before we even thought about the vaccine, issued basically, of an open call to the industry and an open call to science, academia, anybody, was basically the fact that we would share all of our infrastructure and as open a manner as possible, for the purposes of solving this pandemic.
And, our CEO - we called it sort of the 5-point plan to basically battle COVID. So - we weren’t thinking of ourselves. We were thinking of how we can help any organization, any scientist, any university, any company, to share insights and all of our tools; how we can marshal our best scientists, our best process development people, our best supply chain people; how we can apply all of our vast expertise in drug development.
It’s not just the discovery of a molecule, it’s also how do you develop it and how do you bring it through clinical trials? How do you really leverage that platform of our scientific and our data? How do you also then leverage what I would classify as one of the largest, if not the largest, manufacturing platform that’s in the industry and in the globe? And a significant portion of our manufacturing platform, by the way, is in the United States, with a significant amount of our expertise on drug development and also manufacturing.
And then how do you do that and what’s the best way that we can help really improve the speed by which this gets done? So we issued this first sort of open sort of system plan. And I can tell you myself, my group, and hundreds of other Pfizer colleagues, immediately were fielding hundreds of requests for scientific expertise, manufacturing expertise, supply chain expertise, data tools, clinical trials, all that.
And we spent a lot of time very rapidly doing that. And what we did is one of the items that came through was this opportunity from this company by the name of BioNTech, a German-based mRNA innovator, that had not had any drug brought to market yet. But what they were looking for was a lot of sort of platform capabilities, tools, people, science, and a supply chain, in order to bring that to market.
That was one of the many hundreds of insights and of organizations that we had looked at and had looked at partnering with. And our scientists immediately recognized that mRNA and I’ll talk about this in a few moments, was much different than what I would classify as traditional vaccine manufacturing platforms.
If we go to the next slide, I’ll show you sort of the timeline by which we were operating within. So again, January of 2020, it was January 12, the Chinese government uploaded the SARS-CoV-2 genetic sequence. And BioNTech at the time, and this is a company that we were doing some work with on the flu vaccine, so we had really good understanding of what it would take to look at sort of our scientific platform of mRNA.
What they did is they immediately started in the March timeframe, to run animal studies. And they approached us with the opportunity to work with them on really bringing the first mRNA vaccine to the world. So with not much beyond a letter of intent, Pfizer and BioNTech, we signed a letter of intent in March of ‘17. Our development organization, our scientists, and our manufacturing platform started to work with them on the first phase 1/phase 2 clinical trials, which you can see here, started in April and May.
And what ended up happening is in Germany we inoculated 200 subjects between 18 and 55. And in the US 360 subjects. And we started to basically go through the clinical trials. And we had four different doses in the clinic at that point in time. And we selected late July, the (162B2) sort of dosage form, and we then ramped up our phase 2B and our phase 3 clinical trials. And we started to inoculate 44,000, I think it was close to 45,000 subjects.
If you go to the next slide, mRNA is like the battery-operated car. So what we needed to do again, in that 9 months, is basically develop a battery-operated car for a vaccine. That’s what mRNA was. So it forced our entire supply chain paradigms to basically be rethought. If you go to the next slide, what we thought was mandatory for this new paradigm in supply chain design, was first and foremost, there was nothing that was sacred anymore. We had to obviously break through and think about things completely, completely different, right?
We couldn’t necessarily think within our existing vaccine technology paradigms. We need to have speed and agility within our supply chain design and manufacturing, like no other. As I’ve said before, gone were PowerPoints, gone were governance meetings, gone were meetings upon meetings. It was all about speed and agility. It was how we could become a Formula One or a NASCAR pit crew.
We had to basically rethink the entire manufacturing paradigm. And I’ll talk about that in a moment. But you’ll see that picture there that, if you look at that you can see a rack of basically what I would classify as manufacturing plants in a rack. So if any of you have ever been into a data center, you’ll know there’s racks and racks of servers. If you go into our manufacturing plants, what we did here is we reinvented the paradigm in manufacturing, and we have manufacturing plant stacked upon manufacturing plant in racks. And I’ll talk about that in a few moments.
We had to leverage a whole brand-new paradigm of digital technology to basically drive in our manufacturing and our supply chain in logistics. And we had to collaborate inside the company and outside the company in new and different ways that we never saw before, that we had to drive. So - the entire paradigm of how we designed our supply chain, had to be completely rethought, and it had to be rethought within the skill sets that we had here in the United States, and within all of our entire manufacturing, supply, and scientific network.
If I go to the next slide then, let me show you a little bit about mRNA. So my goal here is not to give you a true biological course here, but it’s just to show you what mRNA is. And what you do is you start off on the left and we start off in St. Louis, Missouri. And we manufacture - we take out of the vaccine, out of the spike protein of the COVID virus, the spike protein, we took the raw DNA and we grow the pDNA in St. Louis.
We then freeze it to ultra 90, minus 90, and then we move it to Andover, Massachusetts where we then through a series of transcriptions, we then make what we call messenger RNA. So a piece of the RNA of that spike protein. Then what we do is we then ultra-freeze that and then we move that to Kalamazoo, Michigan and/or we and or we airship it to Peer, Belgium. And we take that messenger RNA and we surround it with a fat lipid particle.
And then what we do there is you then fill it into vials, you inspect it, you package it all at Kalamazoo or Peer, Belgium. And you’re doing all of this at ultra-low temperature. You then have to flash freeze it at minus 90. You have to ship it at minus 90. You then thaw it out and it has to be administered to the patient. So what Pfizer ended up becoming is not just a manufacturing and logistics company overnight, which we already were, but we also became then a software company.
So think of mRNA/pDNA as a piece of software. And as the virus can mutate you can update the DNA mRNA software. And you can then again, surround it in your lipid particle and then manufacturing and ship. And we do all this now today, start to finish, 60 days from start of the St. Louis process, all the way through to the administration in an arm is 60 days end to end no matter where you are in the world. So that gives you sort of an idea of the supply chain that we built. If you go to the next slide, this is what it looks like. So this is the raw vial on the right hand side.
It’s a six-dose multidose vial. It’s no surprise Pfizer/BioNTech you get two shot regimen 21 days apart. And just to give you the logistics side of it, we freeze it from minus 90 to minus 60 in 9 months. I’m sorry. It’s allowed to be stored for up to 9 months. We then move it in a thermal shipping container. This thermal shipping container I’ll talk to you about here in a few moments, is actually then - it’s actually on display now in the Smithsonian Institute in Washington, DC.
It’s a first-in-class sort of paradigm breaker. It allows us to hold it up to 30 days within that shipping container. Then at the inoculation point, they can freeze it at minus 25 to minus 50 for up to two weeks. And then it can then be thawed and stored in a refrigerator for anywhere from 2 to 8 degrees Celsius for one month while you’re inoculating.
So - let me now walk you through the four big innovations. If we go to the next slide let me start off with the manufacturing process. Okay? And in the manufacturing process, typically we were dealing in a serial process in the upper left, that typically took a lot - typically took 24, perhaps as long as 36 months to develop that process. And what that process basically is, using traditional techniques, is you take a cell, and I’m in the upper right hand side, you take a cell; you then feed it sugar, you know, you make it really happy and you have it replicate.
And then you continue to have it replicate in larger and larger bioreactors. And in our case, if you go inside of Pfizer, typically 12,000 liter is the largest bioreactor you’ll see. If you go in the pharmaceutical industry, typically the largest you’ll see is around 20,000 liters. And the first thing we had to solve from a manufacturing perspective, is there’s not enough 12,000 and 20,000 liter bioreactors on the planet, let alone in the United States that are not just within Pfizer, that are in any company, you know, that’s in the United States. There are just enough of them that exist.
You don’t have enough capacity available to produce billions and billions of doses. So rather than scaling up, what we did is we scaled out. And let me tell you what that looks like. That’s that picture on the lower left. So in the lower left, if you look right in the middle, you’ll see a little box there with a screen in the upper left, and you’ll see two little stainless-steel pumps - two little stainless-steel piping rather, that’s coming out of - that’s going into a pump.
And what we have there is we have basically a manufacturing plant. And what you do is you take that raw mRNA I talked about earlier, from Andover Massachusetts. And you surround it with the lipid particles. And you take the mRNA in one end and the lipid particle in the other end and they come through those two tubes. And then in that pump, that little miniature pump that can fit in the size of my hand, they then get merged and combined, and now you’ve just created your final vaccine.
And what we did is each one of those is a manufacturing plant, and that’s what it looks like sitting in Kalamazoo, Michigan. And what we did then is we created not only software to control that little plant in the plants, we then started to design and procure all those little miniature plants and we scaled them out. So if you walk into our Kalamazoo, Michigan plant you won’t see those big reactors in the upper right, what you’ll see is rack upon rack upon rack of little miniature pharmaceutical plants that then get - create the therapy.
And then what we do in the middle is then we fill it into that vial. And because you’re dealing with mRNA, mRNA is very, very micro, micro level doses. Right? It’s micro level doses. It’s such high potency in such small volume, we literally had to reinvent all of our fill finish capability. And candidly, we’re at the edge of physics and fluid dynamics. That’s the other thing we had to do, was reinvent that. And again, we had to do that - all in scale.
So - if I go to my next slide, then. What you see here is basically another view of what that pump looks like, right, and you can see gone is the 12,000 liter large stainless steel bioreactor that would take up two floors, three floors of a manufacturing plant. And what you see is miniaturized piping, miniaturized pumps, all in racks. And that’s the first big innovation that we accomplished here in the United States.
So - it’s not just the physical side of it, it’s also the software that controls that. So - if you go to the next slide, that was the first big mission impossible that we solved. The next mission impossible, if we go to the next slide then, is again, we’re on sort of the - we started to talk to the levels of our fluid dynamics. And what you can see in this picture, and it’s not the best picture in the world, but what you can see here is miniaturized piping that all had to be designed for fill finish of exceptionally, exceptionally small dosage forms inside of vials.
Again, another big innovation that we worked on in parallel all while the scientific community and all while we’re running clinical trials. So we’re doing all of this science and supply chain design work, all in parallel. And many, many times, all during our development cycle, did many things change. But we tried to be, and we were, as flexible as possible and did everything we could obviously, to design these supply chains with flexibility in mind. So that was the second biggest innovation that we had.
So - if I go to the next slide then, that was the next sort of mission impossible solved. So problem number two solved. Now we had to scale this. If we go to our next slide, and I’ll see if we can sort of just hit the spacebar once, if you can, and hopefully this will build this out if - there’s some motion on this slide here. If there is. I don’t know if that’s possible or not. But what we had to do, is we had to build out a manufacturing network here and there is a little bit of animation in this.
I don’t know if it doesn’t come up then maybe what I could do is I’ll just sort of describe it. But what we had to do is we had to take our network that we had built in St. Louis, in Andover, Massachusetts, and Kalamazoo, and we had to - and also Brussels, Belgium, and we had to physically clone that network throughout the various portions of the world. So - we had to scale that network up.
And if we go to our next slide then, that was sort of the next sort of mission impossible that we had to do. So now that we have a manufacturing network that wouldn’t necessarily produce 200 million vials or 200 million doses anymore, had to produce billions of doses, we then had to solve the last problem, which is the, if we go to the next slide then, which is how do we then ship this around the world?
And how do we ship this in a situation where we needed to make sure that beyond a shadow of a doubt, the safety, the efficacy, the quality of that product could not be compromised once it left Pfizer’s hands? So we designed this thermal shipper that you see on the right, which right now, as I said to you earlier, is we have an example of this in the Smithsonian Institute. And let me tell you what this shipper had to be.
It had to be obviously easy and efficient to pick and pack because we’re shipping billions of doses. We needed to have this product - we needed to have the quality of that product be stable for up to ten days no matter what environmental conditions that box faced, whether it faced a deep-frozen environment in Maine or whether it faced a hot environment near the equator. It had to be reusable. We’ve tried to do this as best as possible for reusability, and as I’ll - I’ll make sure I tell you this, that we have received back - roughly 70% of these we received back.
When we shipped these out, we shipped them back with a reuse - with a shipping - a return label so that the customer or the inoculation point can send them back for the purposes of green supply chain. We also needed this thing to weigh less than 50 pounds. And the other thing, as I said also, we needed to be real time data monitoring this. This thing had to be basically a portable factory. Right? It’s a portable sort of hospital maybe is another way to look at it.
So we wanted this to be used as a storage at the point of use. We wanted 24-hour monitoring. And we wanted equitable access to our vaccines in hard-to-reach areas. So it didn’t matter where you were in the world and what environmental temperature you were dealing with, you could get this vaccine. And that’s what was designed here.
Now let me give you a couple of statistics here, 75% of these are reused. And if you remember the first six months of 2020, there was a lot of popular press about how the vaccine was going to be inherently difficult to get out to patients. And let me tell you, this box made the logistics and the shipping a non-event. As I sit here today on time in full, we are sitting at 99.99%. On time in full against the shipment of 1.8 billion doses. It’s literally a non-event. And it’s because of the engineering design that Pfizer had completed. And that was the fourth big innovation that we had driven through.
Again, there are 400 innovations. These were the big four - reinventing the manufacturing, reinventing the filling, building out a network in world record time for billions of doses, and being able to ship it out and real time monitor it, no matter where we are in the world. Those were the big four things that we did as a supply chain.
Where are we today? If I go to the next slide, and I go down one more, again we’re shipping - these are all the countries. So again, this is as of the beginning of September, right, we’ve shipped to 140 different countries in 9 months. Okay? A typical product launch for us, and in the pharmaceutical industry, is typically within 9 months you’re lucky if you can ship to - I’m sorry you’re lucky if you can ship to roughly five or six different countries around the world.
In 9 months we shipped this to 140 countries. We’re on target for 3 billion doses. As I said to you here today, as I’m sitting here in the chair this morning, last week we produced 100 million doses across our network. That’s 20 million doses a day. That’s roughly 750,000 doses an hour. So in the 30 minutes I’ve already talked to you we’ve produced roughly over 300,000 doses, which will go to 150,000 patients in the world, in the 30 minutes that I’ve talked to you. Okay?
So we are, on track for 3 billion this year. And we’re gearing up for 4 billion doses next year. And this is building out an entire network that 12 months ago, 18 months ago, was only built out for 200 million doses of vaccine. So where do we go from here, and maybe a little picture here - I should say every time, if we go to our next slide, every time that we launch a new market and you can see here we launched 100 markets in 6 months, it’s not a - it’s a success, but it’s also very emotional. Right?
Because every time you get another vaccine into somebody that needs it, you’re saving a life. And I’m not here to talk to you about vaccine theory. I’m not here to talk to you about the science. You can read up on the science. But every time somebody gets a vaccine you’re saving a life, is really what it comes down to. So that’s sort of the proudness that we all feel.
Just some of the lessons learned, and I’ll sort of start to close it out, if I go to the next slide here - the, you know, a couple of things that we’ve done, the biggest learnings that I would tell you, one is there’s no time for governance, bureaucracy, or meetings. If you’re not on the frontline of solving this problem in Pfizer you weren’t in the meeting. We only wanted people on the frontlines.
So if you weren’t in the meeting, that’s not a bad thing culturally, because you were solving another problem to keep other critical medicines on the market. Okay? You weren’t necessarily working on the vaccine, but you were working on other critical medicines that were going to keep the public safe and secure. So culturally, many of our people had to take their place on the front line on the vaccine, but they also had to take their place on the front line of other aspects of Pfizer, not associated with that.
The bravery - we committed $2 billion at risk. I want to make sure you understand that, $2 billion at risk. And we’re proud to say that we never took any money from any governmental organization. Now there are many people that look good on that; there are many people that don’t look good on that. Let me tell you why we didn’t take it. We didn’t take it because if you take money from anybody you then introduce another stakeholder in your decision process, in your speed, in your timeline.
We wanted to unleash the scientists; we wanted to unleash the development people; we wanted to unleash our supply chain people. We wanted the best experts in the room solving the problem. We didn’t want any other stakeholders. Which then led us to new forms of collaboration and in many ways, no going back. Right? So that’s - this has permanently changed the way we think of, inside of Pfizer, of the way that we sort of develop, design, and supply, and manufacture our therapies for our patients.
If I go to the next slide, we’re now at a point now where we’re starting to apply all these learnings, and I’ll show you how that is if we go to the next slide. Within the context of we’re ramping up production, I talked about that. We’re looking now at new dosage formulations that instead of needing to be deep frozen, perhaps could be refrigerated.
We’re certainly doing a lot of work on boosts, booster shots, boosting for durability. You see a lot of popular press around the boosting now of 5 to 16-year-olds, which is in the younger population. We are getting organized around, and we’re certainly prepared for any variants that come at us. And we’re also looking to expand this mRNA technology, that software component, into other disease states like cancer, like other sorts of potential pandemics.
So if I go to the next slide, I just wanted to sort of say that it was through all of this great ingenuity that we had done here in the United States and also other portions of Europe, that we were able to really build what we would state is the electric car of vaccines. There’s new mRNA technology and to date we’re the most successful if you want to define it that way, by the production output of our supply chain.
Again, 2.4 billion doses to date; 1.8 billion doses shipped. And the difference between the 1.8 and the 2.4, is the fact that it takes us roughly 21 days to do quality checks and release it, because we want to make sure that only the highest quality goes out. So - in closing, I just want to thank you here, if you go to the next slide, I want to thank you for the opportunity here today to talk to each one of you. Hopefully, you took away something really big here.
This is the power of supply chain. This is the power of the American ingenuity. This is the power of an American healthcare and pharmaceutical, and an American supply chain capability, that you just saw here, that candidly, rose to the occasion and did it for the purposes of contribution, not competition. So - I want to thank everybody here for this.
Rick Blasgen: Jim, thank you so much. What a great presentation. What a fantastic story for our group. We’re at 12:15, but if you can stick around for a few minutes, I know a few of our members might have some questions.
Jim Cafone: Absolutely. Yes, sure. No problem.
Rick Blasgen: Great. Thanks, Jim. Questions, Operator?
Coordinator: If you would like to ask a question, please press star 1 and record your name when prompted. Once again, press star 1 and record your name when prompted. One moment, please, for our first question.
Richard Boll: I think the question is - I think the gentleman is asking the question. At least I can see Rick is muted.
Rick Gabrielson: Okay. Sorry about that. I didn’t want any background noise. Real quick question - I’m curious, have you - great, phenomenal story, approach, you know, a lot of paradigms. Have you been approached by other organizations or even institutions that look at your model if they can maybe use it to replicate and revamp their supply chain?
Jim Cafone: Yes. You know, it’s an excellent question. And the answer to that is yes. And it’s many different types of organizations, right? So there are many of what I would call philanthropic organizations, nongovernment organization entities like the Gates Foundation, like (COVAX), like many different organizations that operate in what I would classify as low and middle-income countries, that have been asking us quite a bit about the learnings that we have and how they can replicate those learnings for other disease states. Right?
So that’s probably the first population of people. Look, I’ll be honest too, the other big population of people is other governments around the world. Okay? It’s no surprise that if you look at the greatest amount of ingenuity, in our particular case, it originated out of the United States. Okay? Both design development and supply chain.
Now what I mean by that is the ability to - the science came from BioNTech. Right? But our scientists worked with them on the development of it. But the supply chain scale and size came from us. So there are a lot of different countries and organizations around the world that are now looking at how they can replicate their own capabilities so they’re not dependent upon what I’ll call Western sources.
So that’s probably the second big population, which is why I believe that the US/Western Europe really needs to capitalize on this entire experience here from just a pure technological expertise. It doesn’t - and I don’t mean vaccine. I’m just talking about having technological experts. manufacturing supply, ready to solve big problems.
Rick Gabrielson: Yes. Great. Great point. Questions from the group?
Coordinator: Our first question comes from Jonathan Rosenthal. Your line is open.
Jonathan Rosenthal: Great. Jim, I’ve got to tell you, absolutely spectacular. Spectacular. And, you know, not only is the science that you developed, incredibly meaningful and impactful and the processes spectacular, but in, you know, in my experience the hardest part of great innovation is people. And I was wondering whether you guys have thought about or would be interested in thinking about, studying with, you know, researchers how you got so many people to change the way they thought? Because that is the hardest part of innovation. And you guys did it in unbelievable time, and I don’t know how the hell you did it.
Jim Cafone: Yes. So first of all, Jonathan, thank you for the kind comments, really, certainly not warranted, but, you know, we appreciate - obviously, I appreciate those comments and I know everybody does. We are - we were fortunate and, you know, look it starts off at the top with our CEO. Right? The tone, the culture of the company under our CEO, has changed quite dramatically under this whole guise of innovation over the last two to three years. Right?
And it starts with a culture of you’re trying to create something bigger that’s not part of the individual, but it’s part of the entire team. Right? It was all focused on the team. And yes, we would, I mean I think there is a lot to be said about - and by the way, we’ve been asked this from different types of what I’ll call industrial psychologists, different organizations, about how we did it in a manner by which we did it.
You know, because candidly, we did this in a very humble, but a very directed and deliberate approach. You know, as you can probably tell, we’re very, very humble at what we’ve done. And we’ve been able to do it. And I think we’ve been able to do it through really the human ware. Right? There’s a hardware component I described, there’s certainly a software component I described, but it’s exactly as you said, Jonathan, it’s the human ware and it’s the culture of those humans that really made it happen and the teamwork and everything along those lines.
So, yes, I’m sure - we’ve definitely have been approached on and yes, we would be interested in it. I’m sure we would.
Jonathan Rosenthal: We would be interested in funding that effort, or some of that effort, if you wanted to talk about it.
Jim Cafone: Sure. Yes. I’d be more than happy to talk through it. Look, at the end of the day, if this can help any company that’s on the phone or any, you know, look, any other industry in the United States, this learning, absolutely. And by the way, our learnings can be applied no matter who you are. Right? It doesn’t necessarily need to be a vaccine. It could be fighting fires and, you know, somewhere; it could be disaster relief; it could be coming up with the next food product for somewhere.
But yes, absolutely. I’d be more than happy to talk with you. And Rick, maybe we could talk about how we, you know, we - Jonathan and I can get connected. No problem.
Rick Blasgen: Sure. We’ll do that.
Jonathan Rosenthal: Thank you.
Rick Blasgen: We’ll do that.
Jonathan Rosenthal: Thank you, Jim.
Coordinator: Our next question comes from Brandon Fried, with Air Forwarders Association. Your line is open.
Brandon Fried: Jim, thanks for this very insightful and inspiring presentation. And I agree with Jonathan, this is just amazing. I represent the freight forwarders and I’m curious, I know that in the distribution effort you were using the integrated carriers, the FedEx’s, the UPS’s, the DHL’s. Were you also using the airlines and freight forwarders to distribute the vaccines?
Jim Cafone: And I can get you further information on that. The answer to that is yes, but it depended upon the lane and it depended upon, you know, it was basically the lane, Brandon. But we - look, we erred on trying to keep the logistics network concentrated. Okay? And we tried to do that in a risk-adjusted fashion. But yes, it depended upon the lane and where it was going. So - we did use forwarders in certain cases, but it was very, very lane dependent. It was very lane dependent.
Brandon Fried: Thank you.
Coordinator: I show no further questions in the phone queue.
Rick Blasgen: We do have one from Maureen Karig in the chat box here, asking if this had been a commercial endeavor, how would the timeline have changed? Good question?
Jim Cafone: You know, it is a really good question. Let me maybe state this, right, crisis breeds opportunity, opportunity breeds sort of, different paradigms. So - we were able to prove to the world, prove to our patients, that we could fundamentally redesign the paradigm of vaccine manufacture. And we did that with a lot of - and by the way, it doesn’t just get done with Pfizer people; it gets done with, you know, the 45,000 clinical trials, the doctors around the world; it’s a village of what it takes.
It’s trying to be something bigger. The question we have right now inside of Pfizer is, can we do this now for every effort, right, can we do this for every effort? And the answer to that is we don’t know yet, right, because it’s - to do everything now at light speed, I mean I can’t tell you how many people - look, you don’t develop, you don’t have a supply chain network, and let’s call it a human network, waiting around, built for a pandemic.
You build it in process, and that’s what we’ve done. We now need to take some of those business practices and move them from what I would classify as more one-off, to be part of the system and DNA fabric of the rest of the company. So that’s probably one way I would answer it. Also, you know, from a commercial endeavor perspective, look, you know, I think the entire industry gets - and by the way, I’m probably going to personalize this and I shouldn’t.
I think the entire industry gets a bad rap, right, that it’s just commercially focused, not patient-focused. I can tell you right now there’s no better way to understand this industry than have a 13-year-old that’s your son, being diagnosed with cancer, and that was me. My wife and I arrived. My son fell off his skateboard and arrived in an emergency room with what we thought was a jammed shoulder and one hour later they discovered a grapefruit-sized tumor on his lung.
And what I can tell you is, is that 8 out of the 10 therapies were from Pfizer. The other two were from another US-based pharmaceutical company. The US pharmaceutical industry saved my son’s life, okay, so - and by the way, the prices of those drugs that we sold them for were less than a Starbucks cup of coffee. So - I get very impassioned about this.
So - I’d like to say if this was a commercial effort versus a pandemic effort, there would be no sort of difference. We don’t think in terms of commercial; we think in terms here, of what can we do to save lives? It’s all about breaks - our CEO says, it’s all about breakthroughs that change patients’ lives. And if you’re ever, and we all will be at some point, the other end of a patient, you’re glad that the US pharmaceutical scientists and industry are there, having your back to do that. So - I don’t think it would be any different.
We’re now asking ourselves again, how do we sort of scale this to come out with therapies that can change patients’ lives faster, because there’s a lot of people waiting out there for a therapy that there isn’t one that exists right now, right or wrong. So anyway, that’s the way I would answer it. And by the way, my son is alive today and well, and he’s cancer cured. And he’s a junior in university now. So he’s doing exceptionally well. So just to leave you with that. So, thanks to the US pharmaceutical companies.
Rick Blasgen: Congratulations on that. Jim, I don’t know what to say. I want to be respectful of your time. You spent an hour with us, but you’ve spent, you know, a career just explaining everything that you’ve done and the success that you’ve had. You know, for a group like ours that live and die with supply chains and we care about - deeply around this country’s competitiveness and what we all do, it’s just so wonderful to hear from one of our colleagues about what you were able to accomplish through world-class supply chain management. For that we all, collectively, thank you.
Jim Cafone: Yes, thank you. And look, thanks on behalf of Pfizer and thanks, on behalf of the US Pharmaceutical Life Sciences and, all the supply chain experts around the country. We’ve been able to learn from freight forwarders, retail apparel, anybody and everything, and that’s sort of what all brought this together. And I guess Rick and just the rest of the organization here, you know, have a great rest of your meeting.
If there’s anything I can do or Pfizer can do, we are students of supply chain. Anything we can do to help with your endeavors and, certainly help with the US competitiveness, I’m really impassioned about that. And myself personally, anything I can do, we can do, just please don’t hesitate to reach out. All right?
Rick Blasgen: Jim, thank you. Thank you very much.
Rick Gabrielson: Thanks, Jim.
Rick Blasgen: All right, everyone, we have scheduled our lunch break here. My suggestion would be, Rick I’ll ask you as well, maybe we leave it to a half an hour. We’ve got some people who are going to be joining us right at 1:05 from outside - Ronnie Chatterji. So I think we need to be cognizant of that and reconvene here at 1:00 pm Eastern Time.
Rick Gabrielson: I would agree. Stay on schedule.
Rick Blasgen: Okay. Rich? Rich Boll, okay with that and Gene?
Richard Boll: All good with that. Fantastic. We’ll see everybody at 1:00.
Rick Blasgen: All right.
Richard Boll: Enjoy your lunches.
Rick Blasgen: All right, everybody. Thank you, all. Have a great break, good morning, and we’ll see you in a half an hour.
Coordinator: Thank you for standing by. I would now like to turn the meeting over to Rick Blasgen. You may begin.
Rick Blasgen: Thank you very much. Welcome back, everybody. I think we had a great first part of our meeting; some really great information there and a great story by Jim. I’m sure we all agree. When we look at the latter half of the afternoon here, we’ve got some visitors from the Department of Commerce and the National Security Council. And then Caitlin Hughes, and many of us know Caitlin and Ryan Endorf, will join us. And then we get into our committees for the remaining part of the afternoon.
And then a presentation from Dana Goward Resilient Navigation & Timing Foundation. So we’ll look forward to that as well. So - Richard, is our next speaker with us, Ronnie?
Richard Boll: I see him on.
Rick Blasgen: Oh, I do.
Richard Boll: Ronnie? Ronnie, were you able to get in here? Or…
Coordinator: Yes, I have not seen…
Richard Boll: …maybe (Valerie- Coordinator), can you make sure his line is open? Ronnie.
Rick Blasgen: We can see Ronnie, Ronnie on now, so if we can open up the…
Rick Blasgen: Open up the line?
Coordinator: He has not joined the audio conference yet. I’m watching…
Rick Blasgen: Okay.
Coordinator: …for him.
Rick Blasgen: All right.
Richard Boll: Okay.
Rick Blasgen: Well, in the meantime, I’ll introduce him. I’m sure he’s probably dialing in. But he serves as the Chief Economist at the Department of Commerce and Principal Economic Advisor to the Secretary. He’s on leave from his position as the Mark Burgess and Lisa Benson-Burgess Distinguished Professor at Duke University’s School of Business.
He’s been published in a lot of the top journals in strategic management, economics, finance, and organizational studies. He received a 2017 Kauffman Prize Medal for Distinguished Research and Entrepreneurship, the Rising Star Award from the Aspen Institute, and the Strategic Management Society Emerging Scholar Award. He’s won numerous teaching awards and authored several articles for The New York Times, Wall Street Journal, and Harvard Business Review.
He was previously a term member of the Council on Foreign Relations and worked as a financial analyst at Goldman Sachs. And he is now, as I mentioned, Chief Economist for the Department of Commerce. Hello, Ronnie? I’m sure he’s dialing in.
Coordinator: Just one moment. He’s - he will join in just a moment, please.
Richard Boll: Okay, perfect. Thank you, (Valerie - Coordinator).
Coordinator: You’re welcome.
Rick Blasgen: And again, for the committee, don’t hesitate to ask questions. We also are picking up questions in the chat if that’s the way you’re able to submit them as well.
Rick Gabrielson: The only reminder I would give folks, is on your questions try to be as brief as you possibly can, so we get as many questions in as possible.
Coordinator: Excuse me. I’m sorry. I actually do not see his line coming.
Rick Blasgen: Let me see now.
Coordinator: I’m sorry. I actually do not see his line coming in.
Richard Boll: Okay. Just give me a second here. (Unintelligible) is calling him.
Rick Gabrielson: Rich, any success in reaching him, reaching Ronnie?
Rick Blasgen: here you go. Ronnie, can you hear us?
Coordinator: Mr. Chatterji has joined.
Richard Boll: Perfect.
Aaron Chatterji: Hey, everybody. Can you hear me okay?
Rick Blasgen: We can. And I’ve taken…
Rick Gabrielson: Yes.
Rick Blasgen: …the liberty of introducing you. So the floor is yours.
Aaron Chatterji: That’s great.
Rick Blasgen: Thanks for joining us, today.
Aaron Chatterji: So first of all, I’m sorry, everyone, for joining late. I was trying to figure out this audio/video piece. So - Richard, you did a great job of bringing this together, but I didn’t realize until the last second, I’d see both of those things and then spell out my full name, which has a lot of letters, as you can see, Chatterji.
So thank you very much for joining. I don’t think there could be a better time for this group to get together. What I’d like to do is give a quick overview of the supply chain disruptions task force that I’ve been staffing for the Secretary. And then leave a lot of time for questions and comments from you all because you’re the experts on this and I can give you some sense of what I’ve been working on and where we would love to hear from you. But I really want to give the balance of time to get your questions and comments.
I see some familiar faces, including Jonathan Rosenthal, so I might cold call on Jonathan to talk about some of the issues that you’re dealing with right now and some ideas you have. Richard, you’ll just stop me if I’m going in the wrong direction or over time. I’m figuring I’ll speak for about 5 minutes or so, maybe 10, and then get some questions and comments. Does that sound pretty good for you given our schedule?
Richard Boll: It sounds great. Thank you.
Aaron Chatterji: Thank you so much. So - when I joined the Department of Commerce as a chief economist, I did not think I was going to be working as much as I am, on supply chain. When I served in the Obama Administration at the Council of Economic Advisors, if you had asked me then who the supply chain economist was or where the supply chain expertise was in the federal government circa 2009 and 2010, I honestly wouldn’t have known where to tell you to go.
However, now back in my second tour of duty as Chief Economist here in a large department with over 40,000 employees, we are sort of supply chain central for what’s going on in the Department. And when I started six months ago, it was the time when supply chains all across the economy were beginning to tighten and there were a few particular ones that were really drawing my attention.
And so my job as the Chief Economist is to go where Secretary Raimondo tells me to, to deal with the issues that she is most concerned about And also just think about the impact of those issues on the macro economy, and it all started with lumber. And so - if you remember in the springtime, lumber prices had reached record highs. And one of the challenges were bottlenecks in the supply chains of sawmills that produced many of the wood products that go into framing lumber, conventional lumber, and other things we use to build residential and commercial buildings.
And so I went to work figuring out what was the market structure; who were the players; what was the product; and what were those supply chain bottlenecks? And for those of you who know that industry a little bit, in terms of the supply chain side, I like to say I did my Ph.D. in OSB, oriented strand board. Oriented strand board is the engineered wood product that is often used as a substitute to plywood, by builders, for floors and walls, in homes. And prices were sky high of OSB, when I joined the Administration. And it was one of the key bottlenecks we were looking at.
One of the things I realized at the very beginning about work on supply chain, was that every market has different characteristics. And there’s not really a one size fits all answer. So - one of the challenges in building a comprehensive supply chain policy, is recognizing that lumber is different than steel, is different than semiconductors, and is different from what’s happening at the ports today, which I know we have lots of experts on the call about that. I’d love to hear from you in a second.
So understanding the market structure, thinking about potential solutions that the government has to bring to bear, are really important. The second thing I learned during that process is that we have a lot more tools in the federal government to stimulate demand than to necessarily add supply, at least very quickly, in capital-intensive industries.
You know, for a lot of these industries where we’re seeing supply chain bottlenecks, capacity is going to be slow to come online, not for any other reason, but besides it takes a long time for these investments to be made and for these plants or ships, or whatever have you, need to be built. And I think that timeline makes a lot of these challenges difficult, but also one over the long term, we can address, with investments let’s say, in infrastructure, which has been the focus of the Bipartisan Infrastructure Bill.
In fact, when I look at the build back better agenda and the bipartisan infrastructure framework, I see the components of building that supply side of the economy and alleviating a lot of these bottlenecks over the long term. But of course, in the short term, we’re seeing a lot of these supply chain disruptions, and it’s having an impact on the economy.
When you think about the numbers, I think you look at every day, job numbers, inflation numbers, issues around production, these are all affected by these supply chain bottlenecks. I would say the majority of the price increases could be tied back to supply chain bottlenecks or some things related to the reopening after the pandemic. Look at used car prices, for example. Used car prices were a big component of inflationary pressures over the last several months, and it can be explained in part, by some of the shortages of semiconductors, the chips that go into new cars and are obviously in used cars.
When we have fewer chips to put into new cars, it drives up demand for used cars and with limited supply, the prices have gone up. And so you see that show up in a lot of the economic numbers we’re looking at. At the same time, a lot of auto companies were furloughing workers and shutting down production because they couldn’t get the chip to put in the cars themselves.
And so when you think about supply chain bottlenecks, the situation in autos and semiconductor chips, is very different than it is in lumber. I’ve been spending a lot of my time on semiconductors more recently. As an aside, I like to say that, you know, since I joined the administration lumber prices have come way down. So - I have a chart in my office that I shared with Secretary Raimondo, that shows the price trend of lumber and then Ronnie Chatterji joints right here, and it’s come down since then.
So - I’m trying to take credit for that, but she knows the difference between correlation and causation. So, she hasn’t bought that story. But it is a reminder that some of these supply chain bottlenecks have worked themselves out in various industries, and some of the forces that worked in the lumber industry may show up in some of these other areas as well.
In semiconductors, it’s been a significant challenge because of the global supply chain, interconnected web of companies that are all over the world producing highly complex products. And I think that there are short term solutions and long-term solutions for that that we’ve been exploring in the supply chain disruptions task force. One of the solutions in the long term is the Pass the Chips Act.
This is a massive investment of $50 billion in our domestic manufacturing ability to build semiconductors here in the United States. Most of that production is done abroad. We, of course, do a lot of the design activity in the United States and other countries. But we need to bring more manufacturing here to have a reliable supply chain for chips that don’t just power cars today but are going to power electric vehicles and autonomous vehicles in the future, as well as the burgeoning Internet of Things.
And so it’s something that we really are thinking about in terms of the critical supply chain issues. Last issue in the supply chain disruption task force, has been working on the steel industry. A lot of you are seeing the impact of higher steel prices, and the industry is undergoing a big transition in terms of consolidation and adding capacity. And those things are also having an impact on the market structure as we speak.
And so looking at the impact of steel prices, thinking about some of the supply chain bottlenecks, that that’s related to, has been another focus of the supply chain disruptions task force. So - for Commerce, this task force was launched on June 8th. Secretary Raimondo is the point person. We dealt with those three areas - lumber, semiconductors, and steel.
Two other Cabinet Secretaries also represent another task force. Secretary Vilsack is dealing with food and cultural products. And Secretary Buttigieg is dealing ports and logistics issues. Now, over the last couple of weeks, the ports issues, while always on the radar for DOT, have really become an important issue here at Commerce as well, as we’re trying to contribute to some of the solutions in that area as well.
You saw President Biden announced the ports going to 24/7. You’re seeing today or yesterday, I should say, the Governor of California issuing an Executive Order to try to relieve congestion at the ports. You’re going to continue to see a lot of activity in that area. And I’m very interested to hear, you know, what folks on the call have to think about these bottlenecks as well. Maybe I’ll cold call on Jonathan in a second, to kind of facilitate a discussion.
The last thing I want to say is I think that the pricing policy is a new area for many policy makers. I often joke that I come from a business school and taught there for 15 years at Duke, and there’s a required class in supply chain management. But when it comes to public policy schools which I have another appointment in, a secondary appointment, it’s not a required class. And that’s because supply chain policy hasn’t traditionally been sort of a capability in the US government or many governments around the world. That’s starting to change.
And I think what I’m finding in my work with our partners and allies, is that we’re talking about supply chain as a first-tier economic issue, in a way we weren’t before. Countries around the world are thinking about how to build more resilient supply chains. But before they do that they also have to define what resilience means to them.
A lot of companies or countries are thinking about supply chains as a competitive advantage. But at the same time, talking about collaborating with other nations, to build more resilient supply chains. These are the kinds of issues I think that are being worked out in these international dialogs. And I think it’s going to be the foundation of a lot of work for the Commerce Department and others, going forward.
The last piece, as just a wonky economist I can add, is I think we do need better data and capabilities in the USG. And this is going to be a segue way maybe to hear some ideas that Jonathan and others might have on this. But I think that, you know, we’re not set up necessarily, to analyze supply chain. When I think about the data that I work with every day, a lot of it is focused on individuals, organizations, industrial sectors.
But connecting those things to build supply chain data is something that the government needs to invest more in. We also need to be using more cutting-edge tools to do supply chain mapping and monitoring, collaborating with industry, thinking a lot about how to apply machine learning to doing supply chain monitoring and mapping. And I think those skills and the ability is going to be necessary as we go forward and try to build better policies around these issues.
And then maybe we can facilitate a broader discussion because I know there’s a lot of folks on the call with a lot of expertise. I’m happy to answer any specific questions. But I wanted to give you enough time for your questions and comments. And I’ll cut it short there. So Jonathan, any ideas on that? Oh, did we lose Jonathan? Let’s see. Well it’s not…
Rick Gabrielson: …(Bolton) or Jonathan Rosenthal?
Aaron Chatterji: Oh. Jonathan Rosenthal. I’m sorry. Jonathan Rosenthal. Yes.
Rick Gabrielson: (Valerie), if you can check if Jonathan is still on the line if you could release his line?
Coordinator: Yes. One moment. I’ll open his line. Yes. Your line is open, sir.
Jonathan Rosenthal: Thank you. Let me just say to my colleagues on the committee, over the past six months I’ve gotten to know Ronnie, pestering him with all kinds of crazy ideas, and I have never had a chance to work with a smarter, harder working, more creative person in government, ever. So - we are really, really blessed to have folks like Ronnie who, you know, leave their jobs and come to work for government. We need them desperately. So Ronnie, thank you for what you’re doing.
So Ronnie and I have talked a lot about information technology and things that are happening now and over the next year to three, four, or five years in terms of data collection and predictive analytics and, you know, all kinds of very cool location intelligence stuff. And, you know, he’s been super receptive and the Department’s been very receptive.
But those are, you know, longer term solutions and we need to keep our eye on those longer-term solutions. But Ronnie has challenged me over and over again. Hey, listen, the Secretary needs to fix stuff now. I mean the government needs to address these problems now. You know, Christmas is coming up and people, you know, kids aren’t going to get their presents.
So, you know, these longer-term solutions are great and we need to look at them. But so, you know, I see the - we see the problem across the, you know, we look horizontally because we see the problem across a lot of nodes of businesses that we own. And we see the problem not as an asset problem, but as an information problem. You know, we’re - just as an example, if you look at dwell times of our trucks in the port, in ports, and then you add to that wait time outside the gates, you know, it looks something like about 30% or 40% of our drayage capacity is being burnt up in wait time.
And so, if we can reduce that by some amount, it’s the same as adding drivers and trucks. So that’s an information issue. And so if we can do a better job with information over time, we’ll do a lot better job in managing our underlying assets. But in the very short term, I hit Ronnie with a really crazy idea and I’d love to hear from the committee whether there’s, you know, maybe there’s a seed of something here. I said to Ronnie look, one of the problems we’ve got, I hear from our truckers, is, you know, we - and our friends in the unions and the ILWU, about the terminals and the terminal operators.
The terminals are jam-packed. So opening 24/7, you know, doesn’t really help you until you can evacuate those terminals and get some land free to unload containers. But, you know, you can’t go downstream. Our warehouses are packed. Everybody else’s warehouses are packed. And so it’s hard to, you know, we’ve got panels that are running yards in Chicago and they’re packed.
And so, you know, we ought to be, you know, maybe what we ought to be thinking about doing is some drain off, particularly here in Southern California, where we could do drain off yards. I think 70% of our warehouse capacity is out in the Inland Empire. And, you know, we could do some (drain off) yards out there. Where do you get the land? You know, so I hit Ronnie with okay, you’re the federal government, can you help us with some airports or, you know, could we use excess airport land?
We know that there are some airports that are closed or partially closed. You need them to be paved hopefully, you know, even with concrete, if you wanted to do any stacking. So - we could both do wheeled and stacking. You don’t want people, you know, you don’t want to drain - you don’t want to have a (drain off) yard that’s full of containers sitting on chassis.
That’s the other big problem for us on the trucking side. There’s just, you know, there’s a dearth of chassis, and so our drivers are waiting, you know, two, three, four hours not so much to get into the terminal, but just to get a damn chassis. So - we can’t allow the chassis to be, you know, to have boxes both empty and laden, and sitting, you know, sitting in a yard with containers on wheels.
So I challenge this committee, can we really think out of the box here in the short term, I’m really thinking, you know, in the next 6 months, to give folks like Gene and others, some help in getting containers, you know, onto a (drain off). Maybe it’s in the Inland Empire, for example, here in California. In New Jersey we have exactly the same problem. Can we think creatively with the federal government?
I’ve talked to our friends at places like the Teamsters and others in the trucking business. We could focus quite a few trucks. I mean I’m talking a thousand trucks a day, like that. You know, it just takes some money. And you could create a real network with, you know, free flow gates, large free flow piles in the terminals, and really begin to evacuate some of those terminals and give our ports a helping hand.
So - I put that out to the committee and to, you know, Ronnie, I hope that’s kind of what you were thinking that I would say.
Aaron Chatterji: No. This is perfect, Jonathan. I - this is - it’s great to hear these kinds of ideas. What I’d love now is, in our meantime, open it up if there are other comments, follow ons to Jonathan Rosenthal’s point, that people want to put out there. Or if there are just questions about the supply chain disruptions task force.
I also encourage you, you can all reach out to me here at the Commerce Department as well. I’ll have Richard provide my contact information. There is a lot of expertise on the call, I looked at the list, not just on ports trucking, and rail, but across the supply chain. So I’d love to hear from you. I would love to talk. But why don’t we get, if there are follow up questions, Richard, for - or follow ups on Jonathan’s or questions for me, I’m glad to take them now.
Richard Boll: Great. Thanks, Ronnie. We appreciate it.
Aaron Chatterji: Thank you.
Richard Boll: (Valerie), do we - can you ask for questions in the queue, please?
Coordinator: Yes. I would like to remind participants that to ask a question over the phone line, please press star 1 and record your name when prompted. Once again, to ask a question, please press star 1 and record your name clearly when prompted. Our first question comes from Anne Strauss-Wieder. Your line is open.
Anne Strauss-Wieder: Thank you, (Valerie). And thank you, for the comments. And so, first, talking about the supply chain and what we just heard. And you do have to think of it as a system of a system, a system of systems. So - there are items that support; there are items related to inland movement; there are items related to distribution centers. And I know we have Prologis as part of our committee as well.
But one thing that’s already happening because the distribution centers are also thinking about the customers and the customer experience, and those stock outs, is trying to go to more of a 24/7 operation where feasible. So there has been a trend, and I’m just going to focus on that because that’s sometimes a bottleneck that people point to, is leases have been shifting recently, at least what I’m seeing in the New York/New Jersey area, and again, Doug Ceva may be able to talk more globally, where it’s not just a lease now for the industrial property but also separately, for trailer parking; a recognition that they’ve got to get the goods in.
But to add a third shift to a facility you have to be able to get the workers there. We have a shortage not only in terms of recruitment and retention, but they can’t get there. Accessibility of workers. So - I do want to point that out, that there are issues specific to each of the systems within the systems.
So it gets to two items. First, thinking about the supply chain in three levels - physical flows, the information flows, and then the regulatory framework for doing all this. And then within that and, you know, I’ll put a slight economist had on, I’m a regional scientist by training, with a transportation forte. So what are the key questions we need now? Who needs it? And what’s the data needed?
And, you know, we’ve done it to some degree in our area. Even pre-pandemic we realized we weren’t picking up those last mile deliveries and had to find new data sets and fast (unintelligible) of all places, for how the goods were getting for eCommerce. But I’d just throw that out there about thinking through what’s happening and giving perhaps a multi-disciplinary group together.
Because again, the distribution center folks, they’re coming up with solutions. Trucking (unintelligible) have come up. I’m thinking of ports, for example, GCT Bayonne among others, in our region. One of the first to set up truck appointment systems. I know the Council of Port Performance is here. Lots of conversations even early in the pandemic - where could we store containers offsite, and all the considerations that went into it and even thinking through okay, if you’ve got a shopping mall that’s not open can we put it there? What’s involved.
So - lots of things going on, with an overriding factor of what are the costs involved; how do we make this happen; how do we get it to the consumer? So - I just threw a lot out there for consideration, but I want to turn it back to others. Thanks.
Aaron Chatterji: Thank you, Anne. Thanks for all the good work you’re doing in North Jersey. We appreciate it. And I’ll keep the layered system of systems, in mind. Thank you.
Rick Gabrielson: You know, if I could - this is Rick. If I could tag on Ronnie, to one of the comments that Anne made. There’s been a tremendous amount of dialog recently about going 24/7. And I understand in ports the demand is there and truckers are able to pick it up and there are available truckers and equipment. You can take the largest shippers in our country - the Walmarts, the Targets, the Depots, etc., you could take those top five and up and together it’s a tremendous amount of volume.
But if you look at the overall volume that a port may have, a complex may have, you know, the larger percentage is the smaller and medium-sized shippers, which you probably already know. And so while there’s this push for 24/7, many of our operations really don’t support it or they may not need it. But there’s a difference between saying you need to be 24/seven and having the ability for the operation staff, the security guard that allows those containers to be brought in and dropped, so you don’t necessarily have to have a staff that’s working.
But just the ability to take them in and accept them still moves them while port moves them off terminal. So sometimes there could be some dialog I think around that, and some information or expressing that need to a broader group of shippers that might help move more of them off (of that). I don’t disagree with some of the comments that Jonathan made too that at some point in time, you can’t continue to have large dwell time on your terminals and you may set a standard after that.
It may need to go somewhere else or pick up later on, because there are still a lot of shippers who really want their product the moment that it comes in. And when other shippers may not necessarily be picking their cargo up on time, it then adds the congestion; gets into what’s called a closed barrier. And those are the things that prevent you from really having a smooth operation. So - a lot of moving parts there, but I just offer that up for additional information.
Aaron Chatterji: Thanks, Rick. It’s those moving parts and the multi-disciplinary nature of the problem that Anne mentioned. I mean the labor issue comes in, so we’re bringing in our colleagues in DOL, to talk about that. You know, so it’s the DOT, the DOT and the DOL. And that’s just the combination right there. There are many more dimensions.
And so we’re building up the muscle memory to have these interagency collaborations within government at the same time. And on the industry side, there are multiple players involved too as you mentioned. So it’s a point well taken. And I appreciate it.
Rick Gabrielson: Thanks. Other questions from the team?
Rick Blasgen: (Valerie), any questions?
Coordinator: Yes. Our next question comes from Brandon Fried with the Air Forwarders Association. Your line is open.
Brandon Fried: Thank you. And thanks, Ronnie, for your presentation. It’s very insightful. As you heard, I represent the Air Freight Forwarders. And many of our members, of course, do a lot of maritime shipping. But they primarily specialize in air cargo. And we’ve seen substantial congestion at the major gateway airports throughout the country, where we have trucks waiting six, eight hours, to either tender or retrieve cargo.
And a lot of it’s because there’s insufficient infrastructure, road infrastructure, building infrastructure at a lot of these facilities. There hasn’t been a significant investment in these airports in 40 or 50 years. But one of the big issues that I think we can address as a team right now, is that there is a shortage of labor. And as you know, it’s proliferating throughout the supply chain. But these workers have to be security badged to get access to the secure identification areas.
And while each airport conducts its own security badging operations, this process can be four to six weeks in some places. And when you have these workers coming in at the lower wage scales, they’re not going to wait around that long. They’ll go work somewhere else and they’ll leave the airport. We’ve seen delays in CBP badging even on the TSA side.
For workers that were not born here in the United States, a security threat assessment can also be four to six weeks for those workers, when they’ll tell a worker born here in the United States can be cleared in two to three days. So - I would hope that the Administration would be looking seriously at this because I think if we can address this labor shortage issue at the airports, we can increase our throughput there, especially with the amount of charter aircraft coming in right now that are bypassing the maritime ports in places like Chicago and LA and Seattle and JFK. So back over to you. Thank you.
Aaron Chatterji: Thank you. And I would just say that, you know, it’s interesting. I think the economic recovery is happening more quickly than a lot of firms and workers expected. And I think household balance sheets, if you look at how much money people have in their pocket and the lower level comparatively of debt they have, are in really a healthy place compared to previous recessions.
And so I think you’re seeing this issue where workers are trying to figure out what jobs they want to do and where they might even work, at home or in a physical space. And the changing nature of the job market is going to change the attractiveness and the job quality, perceived job quality of a lot of these roles. And you’re mentioning about the badges and the alternatives that these workers have rather than waiting is well taken and something we need to think about.
We need to look at all these kinds of professions and think about new constraints, new opportunities that might have been introduced by what’s changed during the pandemic. So - I really appreciate it. It’s something that I’ll be working on here. So I’d be happy to interact with you a little bit, too.
Richard Boll: Other questions?
Coordinator: Yes. Our next question comes from Joseph Bryan with One Rail. Your line is open.
Joseph Bryan: Thank you, ma’am. Ronnie, can you hear me okay?
Aaron Chatterji: Yes. I can. Hi, Joseph. How are you?
Joseph Bryan: All right, cool. Thank you, sir. We heard earlier this morning from John Porcari, about the usefulness of exploiting the state freight plan efforts to - towards the source of supply chain purposes we have in mind. Those efforts are actually underway now and will be picking up steam over the next year. The - what they do is they define locations for public investment in freight supportive infrastructure. Done properly they should be aimed at economic development and at gearing up the competitiveness of the industry through logistics performance.
The - what would be really useful to get better clarity about, would be A, what kinds of new industry the US can most likely support? So if we’re looking for new development we know what kinds of new industry may go in there. And then relatedly, B would be what types of industry there are now overseas. We can realistically expect to either be brought back to the US or brought back to Mexico, so we can make our investments in the right place.
And we know what kinds of inputs they need, as well as outputs they need, so that the, you know, the structure of what’s your labor market look like; what are your - how is your inbound supply going to work; how’s your distribution going to work; do we have all of the pieces in place so that we’re making our investments in the right spots?
So if any kind of guidance that can be produced out of your office or your task force that will help the state systematically understand what’s realistic and what is good ways to devote your money, that would be really helpful. It is not a clear answer right now.
Aaron Chatterji: Thank you for putting that on my radar. I agree. The infrastructure is not a generic investment. And so thinking about which specific industries are most likely to be located here in the US, how does our economic development plan which, you know, are being funded in some deals, by EDA, our Economic Development Administration here, in Commerce.
How can that connect the very specific kinds of infrastructure investments to get the most bang for our buck, for the public and private sector? It’s a great point. And it’s something that I can raise with the supply chain disruption task force.
Joseph Bryan: Thank you, sir.
Coordinator: Our next question comes from Doug Ceva with Prologis. Your line is open.
Doug Ceva: Yes, thank you. And it’s Prologis, just to clarify. I didn’t know - Ronnie, I don’t know, I appreciate your time. I don’t know if you know who we are. But we’re in the…
Aaron Chatterji: …but it’s good stuff. I knew it either way.
Doug Ceva: Well - the company I used to work for was Maersk. So between the two of them you can’t get them right anyway. So - but anyway, it’s more of a comment than a question. And the fact is I think Anne mentioned to it earlier, we as a landlord, are seeing so many of our customers come to us and say look, I just need 10 acres where I can park trailers. And that’s what we’re seeing all over the country, everywhere. It doesn’t matter - it doesn’t have to be just in LA, New York, New Jersey, Miami, but it’s everywhere.
But what that is going to do is exasperate the problem because there’s no capacity in the country right now. If you’re looking at building capacity. There’s no - really no warehouses available. So what people are doing is just sitting on containers, sitting on chassis, parking them, and that just exasperates the issue with getting empties back to China, with getting chassis freed up.
So it’s more of a comment, just saying this tends to just be multiple basketballs in the garden hose, not just one with the ports working 24 hours. If they work 24 hours they’re just going to move the containers off and put them somewhere else, which is just going to exacerbate the issue. So - it’s more of a comment. And I don’t know how we handle it.
But we are working internally on various issues, to help people expedite moving. We’re pre-buying construction material; we’re buying used racking so that when people move in we can get racking in quickly if they can get in the building quicker. We’re trying to expedite it. But it’s a tough task. So - I just wanted to make that comment.
Aaron Chatterji: No. It’s well taken and, you know, I think the technical term in economics is whack-a-mole, right? Where we have many, many different problems happening all at once and the only way to win that game at the arcade is to hand out more mallets and let more people work together and collaborate to deal with all of those bottlenecks.
And so I think you’re right. We’ve got to think about it as a systems problem, going into Anne’s original comment. And we are thinking about some of those issues right now. But I’m happy to get more information on things that maybe we’re not seeing as clearly.
Doug Ceva: Yes. Happy to…
Rick Blasgen: We want to be cognizant of your time. I just have one last question that we got in the chat of course. How do you measure success? And we as (unintelligible) people, we measure everything. So there may be some - obviously you’re attacking a particular problem at the moment. But as a particular area that you’re going to look to, to say hey, you know what, we accomplished something here and here’s why, just so you know it.
Aaron Chatterji: Yes. One area we’re really looking at as far as accountability is feedback from folks like you. You know, we’ve been hearing about these supply chain challenges pretty consistently from a lot of different parts of industry. And one of the things I do is just keep checking in with folks to say look, are things getting better; are they getting worse; are they staying the same?
And I do that temperature checking with a wide variety of industries. And where we start to hear things level off or improve, that’s going to be one sign of success. Maybe seeing that in some areas more so than others. The other thing I look at is I look at price levels and production quantities and the addition of new capacity in various industries. You see this for example, in the lumber industry is one example.
Just to be brief, where prices have come way down since the spring. You’re seeing new capacity come online. And those are signs of the supply constraints being alleviated I think. And so those are two of the things - the qualitative insights I’m getting from industry discussions, and also some of the issues or specifics around prices and production levels. That’s where we’re at.
Rick Blasgen: Great. Well, keep that sign behind you on lumber. You may have to move it to oil or gas or food prices, who knows. But nevertheless…
Aaron Chatterji: I’ll do my best.
Rick Blasgen: …(unintelligible) your name there.
Aaron Chatterji: Thank you so much.
Richard Boll: Ronnie, thank you very much. We appreciate you addressing our group today.
Rick Gabrielson: Thanks, Ronnie.
Aaron Chatterji: Thank you, all. And yes, keep in touch. Ping me at Commerce if you need it. And thanks, everyone, for serving in this capacity. I really appreciate your work.
Rick Blasgen: Terrific. Thank you.
Rick Gabrielson: Thanks.
Richard Boll: Thanks. Thanks, Ronnie.
Rick Blasgen: All right. We’ll move over to - we’ll move onto Jessica McBroom. She is with us today. Jessica is the Director of International Economics and Competitiveness within the National Security Council and the National Economic Council at the White House. Her work is really much aligned with ours on strengthening our supply chain. And she’s responsible for execution of the President’s Executive Order on America’s supply chain.
She’s devoted her career to working at the intersection of security and economics. And has had positions at the State Department and the Department of Defense, where she’s currently detailed. She also has significant private sector experience, including at the nation’s premier manufacturing-focused trade association, as well as VP and manager at one of our largest financial institutions.
Jessica is originally from Detroit and has a BA in Political Science and French from Tulane. Jessica, hopefully you can hear us all and we can hear you. We really appreciate your time today. And the floor is yours.
Jessica McBroom: Absolutely. Thank you so much for pulling this together. And thank you, to all of the attendees, for your service on this important council, which is finding itself, I think, more important than ever now. And so you guys are getting just so much attention, which is very much deserved.
You know, I’m certainly familiar with the work of this council when I was Director of Trade Facilitation at the National Association of Manufacturers. And, you know, I always found your work very useful and relevant. And so thank you very much. So I’m entering my eighth month or ninth month here at the National Security Council. And I really began being handed sort of a draft Executive Order on, you know, bringing a more comprehensive approach to America’s supply chains.
And so, you know, my first task was to, you know, make sure that we - that the President was able to sign that Executive Order come February. And, you know, this really began as a campaign promise by then-candidate Biden, to ensure that Americans don’t face the kinds of shortages that have become sort of commonplace over the past 18 months, and really to ensure that we are taking sort of a comprehensive whole of government approach to supply chain resilience.
And, you know, right off the bat, you know, I’ll flag that, you know, the Commerce Department does have an office, you know, focused on supply chain issues. But you know, it has been one that is relatively small and, you know, hasn’t been able to, you know, focus on building supply chain resilience in the way that the - say the Department of Defense has been able to focus on building supply chain resilience in their office.
And so, right off the bat, I’ll have a plug for our critical supply chain resilience program. You know, we’re working with Congress to make sure that there is a dedicated, well-resourced home at the Commerce Department, to really address commercial supply chain issues and like have a home within the federal government because they are so important. So, as you all are doing your work I hope that you keep us in mind and keep that important effort sort of at the forefront.
So, you know, I’ll talk a little bit about the Executive Order and how things are going in terms of implementing that. And then I’m happy to open it up to a few questions. You know, as you all know, the first part of the Executive Order asked for a 100-day report on four critical product areas. Those critical product areas include semiconductors, large capacity batteries, critical minerals, and materials, as well as active pharmaceutical ingredients.
And we were able to deliver those reports to the President and publicly on time. And, you know, they include sort of a host of recommendations which, you know, now sort of constitutes one of our workstreams, which is looking at that 75-plus list of recommendations. And, you know, ensuring that we as an interagency, are addressing all of those.
And so, I hope that we’ll be able to roll out some of these additional actions soon. You know, some of them are already underway, most of them, and we also called for sort of in a cover letter, enhanced collaboration with allies and partners on supply chains. So - I think that you’ll also see sort of activities in that area soon. So I think that is sort of one bucket of our work that we are leading the interagency through.
And then secondarily, there were six industrial base reviews tasked out of the Executive Order. And so those are on the energy and industrial base, which is going to be implemented by DOE on the IPT supply chain, which is sort of co-owned by DHS and Commerce; Defense, which will be done by the Department of Defense; Transportation, which is obviously being done by the Department of Transportation; and Agriculture and Food Systems by USDA.
And then HHS which has been keenly interested on supply chains for about 18 months now, will do a sort of smaller review that has to do with elements of their strategy for supply chain resilience that was released I think, in July. You know, I think we just wanted to make sure that they weren’t doing double work there. So we’re currently leading the interagency through these six industrial base reviews. And I know that you have some folks from the department on later in today’s program, to talk you through what they’re thinking on those fronts.
But I think that it was our sense here at the White House that every agency should be thinking about supply chain resilience and, how to both reinvest here in the United States as well as work with partners and allies to ensure diversity of supply, to ensure that we have sort of sustainable supply chain, to ensure that these are sort of secure from the perspective of cybersecurity and ransomware attacks, which have plagued sort of our supply chains already this year.
And so, I think we really see those as sort of foundational elements of supply chain resilience. And are looking forward to sort of building that out across the interagency. And just to say, obviously we’re a new Administration; we’re starting lots of practices. But I have been completely bowled over and impressed just by the amount of interest in our work across the federal government.
And, you know, how much juice each agency really is giving this effort. And so I couldn’t be happier. And I know that, come February we’re going to have a stellar set of six reports that chart a path to greater supply chain resilience for the United States and for allies and partners. So perhaps I will sort of stop there and take questions.
Coordinator: If you would like to ask a question…
Rick Blasgen: Thank you, Jessica.
Coordinator: If you would like to ask a question over the phone line, please press star 1 and record your name when prompted. Once again, to ask a question over the phone line, please press star 1.
Rick Blasgen: Questions for Jessica? Anyone?
Coordinator: One moment, please, as I cue the first question. Our first question comes from James Cooper. Your line is open.
James Cooper: Thank you. And thank you, Jessica, for those remarks. I really appreciate it. I’m with the American Fuel & Petrochemical Manufacturers. And a question I have for you - I was involved in a lot of very, I would call them last minute HHS and DHS telephone conference calls during the actual disruptions, because our member companies make petrochemicals. And, you know, they - I guess they - I’m not sure exactly what all supply chains they went into.
But I’m wondering how far up the supply chain are your studies considering? Because I’ve found that a lot of times it stops at OEMs and things of that nature. Are you considering the actual chemical building blocks that make a lot of these parts, or are used to make the active ingredients, the APIs?
Jessica McBroom: Yes. So I would say that our work on the 100-day report is representative of what we could do sort of in the deadline that was imposed by the Executive Order. You know, I think it’s our hope that as we move onto these one-year reviews we will be able to take sort of a more fulsome approach.
And I’d also note that a lot of the sort of building blocks and like nitty-gritty information that might have been cited in an API report or the Critical Minerals and Materials Report after we sort of got a couple of tiers down into the supply chain I think agencies start to get uncomfortable about like what is public information and what is proprietary information.
And we just obviously want to make sure to kind of protect those sources and ensure that we are doing our information-gather justice on that front. One, like in the one-year reports like yes, you will absolutely see a more detailed approach to raw material components of the supply chains. But I would also note that some agencies have a significant amount of experience in doing these reviews.
You know, I think Department of Defense already has to do similar reviews. And so they have a lot of information to work with. I think other agencies, this is kind of their first go around. And so, the Executive Order calls for reviews on a quadrennial basis. And so I think we see this as sort of a first step toward identifying those areas of vulnerability, identifying single source points of failures, identifying where we might be reliant on adversarial nations.
And, really taking steps to identify how to get out of some of those knots, whether it’s investments here at home, investments by say, the DST abroad to, for instance secure a critical mineral. I think you’ll see more consideration given to components as agencies can, consistent with business proprietary information. Over.
James Cooper: Thanks, Jessica. That’s very helpful. Are you open to maybe a follow up conversation? I know - I understand you’re very busy. But if one of your folks is interested this happens to be one of my weird areas of expertise, is the actual upstream (unintelligible) all the way down into the finished goods.
And so I’d be happy to have another discussion offline that’s in detail on maybe exploring ways where we might be able to help as an organization with the mapping part of this, with the full understanding - I know the - believe me, with the chemical industry, I know all about proprietary information. And so…
Jessica McBroom: Yes. Yes. I don’t need to tell you guys. Right.
James Cooper: So I just want to throw that out there. But if you’re open to that, I’d love to follow up and have a more detailed conversation to see where we might be able to help as an organization.
Jessica McBroom: Absolutely. Look, I think that each one of these - some of the most helpful information that we did get through the 100-day reviews, was frankly from private sector entities. And I think some of that we just like couldn’t replicate using our sources. And so I am absolutely happy to have the conversation. And I would be even more delighted if I could loop in sort of the report drafters who are in charge of writing these reports.
I think also, most of the agencies though not all, I’m still pestering a few, have done Federal Register notices requesting information. And so I think there are probably four out there. I know that the Commerce Department, our good student, has done them, and a handful of others as well. Over.
James Cooper: We’ve commented on several. But thank you…
Jessica McBroom: Great.
James Cooper: …very much. I appreciate the - I appreciate that.
Jessica McBroom: Right.
Coordinator: I show no further questions in the phone queue.
Rick Blasgen: Jessica, it’s Rick. I would like to ask a question I kind of alluded to with Ronnie as well, around performance management and, how do you know things are moving in the right direction? Are there certain things that you are looking at to measure other than the obvious, you know, the alleviation of our current situation and so on?
But, hopefully several months down the road when things become more supply and demand equal, if you will, will that task force continue on and will there still be work that’s done on behalf of the country?
Jessica McBroom: Yes. So I think the supply chain disruptions task force I think we saw as addressing immediate near-term concerns and not as like kind of an ongoing living body. I think obviously just with the unexpected difficulties that have happened over the past several months, like that was extended.
I do think however, that the (14017) effort will be one that lives on. You know, first of all, supply chains are something that have outlived numerous Administrations. And I would also say that I think we are building a lot of capacity at each one of these organizations and each one of agencies. So I kind of think through and at least kind of remember some of the tools that they actually do already have. You know, I’m thinking specifically, Defense Production Act.
You know, there are a number of agencies that do have Defense Production Act authority but just don’t know how to use them because they’re a 70-year-old statute. So I think when I think about what does success look like - success absolutely looks like longevity. It looks like are these identifying tools in their toolbox that they didn’t have before.
Or, allotting some of their budgets to supply chain risk management tools and efforts. I think a lot of this is obviously like data-driven and like we need to have a more considered and measured approach to that. And so, I do hope that this lives beyond this Administration.
I would also say that success looks like fewer single sources, right? It looks like, fewer times that the Defense Department has to dip into its National Defense stockpile. This looks like recapitalizing that stockpile and making sure that, you know, we have the right stuff in it. I would hope also that we are able to keep more manufacturing here in the United States as a general sort of overall share.
I think it also looks like less dependency on large competitor nations. And I don’t see that as a choice. I see diversity and supply as an important component of a resilient supply chain. You know, you never really want to rely on a single source. And particularly, one that could be prone to bouts of economic coercion.
So I guess I see this as being like a very long-term effort in the way that looking at timber prices and what’s happening in meat markets or the price of gas is - these are I think two separate exercises, but very related.
Rick Blasgen: Great points.
Rick Gabrielson: Jessica, this is Rick and…
Rick Blasgen: Other questions?
Man: Yes. One quick one. You talked about the large competitive nations and reshoring it or diversifying your network. Are there certain - and maybe tag on a little bit with what Jim was talking about, are there certain components or minerals for certain product categories? And if you (unintelligible) set some targets for when you’d like to see either change take place and what those changes could be, or what actions (unintelligible) to accomplish that. Have you seen that level yet?
Jessica McBroom: Yes. Look I think that the most immediate need and what comes to mind, right, is what do we need to secure a green energy transition for the future? You know, specifically, I think that looks like minerals and materials. And so I think we are going to have a fairly urgent need for significantly more graphite, significantly more nickel, significantly more cobalt.
And those aren’t necessarily found everywhere. Some are rarer than others. We’ll also obviously need more lithium, but I think there’s generally more of that. And I think that obviously over the next ten years, our needs are going to change and then they’re going to change again over 20 years.
So, I see critical minerals as like an important area kind of over the next ten years. And I’d also note this is again something that this Administration and the previous Administration shared. But, I think we do need to be smart about where we make our investments. And I think that that looks like keeping a pulse on what technological advances are happening in the battery realm that are going to render X mineral not needed.
Or we’re going to be reliant on a synthetic mineral as opposed to one that’s mined in the ground. You know, obviously processing of these - some of these minerals, is also a single source game. And so, I think we will just be taking a very considered mineral by mineral approach to identifying sort of critical minerals. We have a list already.
But the question is, do we for this particular mineral, invest in domestic sources? If we don’t have domestic sources like cobalt for instance, where are we going to get and process our cobalt? And can we put more money into R&D for recycling of those minerals? You know, can we explore sort of recycling and mine tailing? You know, I think all of these are questions so that we make smart investments both in terms of time and money in our mineral supply chain.
Rick Blasgen: Okay. Thank you. Are there any other last-minute questions for Jessica?
Coordinator: I show…
Rick Blasgen: Well, Jessica - no more questions? Okay, thank you. Thanks, very much for your time. Keep up the good work. We’re behind you. And…
Jessica McBroom: Thank you.
Rick Blasgen: …hopefully someday we’ll have an Office of Supply Chain that transcends Administrations and brings everybody together for our…
Jessica McBroom: Here’s hoping.
Rick Blasgen: …(unintelligible).
Jessica McBroom: I’m be keeping my fingers crossed. How about that?
Rick Blasgen: All right. All right, great.
Jessica McBroom: Thank you.
Rick Blasgen: Thanks very much, Jessica. So long. Okay. Now we’ll move onto our Department of Transportation trends. We have the pleasure once again, of being with Caitlin Hughes and Ryan Endorf. You guys have consistently addressed our group. We appreciate that. There is obviously no shortage of activity, I’m sure, in your world. And we’re looking forward to hearing what is going on. And hopefully, we’ll have a great dialog with you as well. So, Caitlin and Ryan, the floor is yours.
Richard Boll: Ryan, I think you’re on mute. I can’t hear. Can anybody else hear?
Rick Blasgen: We can hear you. Is that you, Ryan, speaking?
Rick Gabrielson: We can’t hear him.
Coordinator: I do not see Ryan in the main conference, audio conference.
Man: Oh. I’m wondering if he didn’t dial in.
Rick Blasgen: There’s Caitlin. Caitlin, can you hear us? We can’t hear you.
Caitlin Hughes: Yes.
Rick Blasgen: I think you have to dial in on the phone. Oh, here you are.
Caitlin Hughes: Yes. Well maybe I’ll start since it takes a while to dial in. And Ryan can catch us up on the second half of the agenda. So I am glad to be back with you again today. I’m sorry I haven’t been here for several meetings. But I have a laundry list of things I’d like to catch you up on. We don’t have any PowerPoints. But one of the things I was asked to share, was an update from our partner agency, Federal Motor Carrier Safety Administration, regarding their Under 21 truck driver program to expand the pool of drivers with commercial driver’s licenses.
So the following talking points are from FMCSA. And if you have questions, I urge you to follow up directly with perhaps Jackson Steenberg at FMCSA. I also shared with Richard Boll, a brochure that Jack gave to me to give to you, which covers a number of these programs, in particular the military application. So Richard possibly can get that out to this group in some way. It’s in your email.
So, in regard to the general Under 21 pilot, in September 2020 FMCSA published a Federal Register notice proposing a pilot program to allow 18, 19 and 20-year-old drivers, to operate commercial motor vehicles in interstate commerce. FMCSA received approximately 200 comments on the proposed pilot program and is currently in the process of reviewing those comments and assessing the data received to assure safety.
After FMCSA completes its review of the comments received, the agency will decide if it will proceed with the second pilot program. And to accomplish this, the agency will have to publish a Federal Register notice announcing the launch of the program. So stay tuned. And as for the military Under 21 pilot, this pilot program requires military applicants to be 18, 19 or 20 years old, to have had heavy vehicle driving experience while in the military, and to have a military occupational specialty associated with driving heavy vehicles.
The limited population of individuals who meet this criteria with interest and flexibility to apply for and hold a civilian driver’s job is a big challenge to attracting drivers. Currently, they have a limited pool of candidates. FMCSA continues to identify opportunities to promote and support the pilot program. So Rick, thank you for giving us an opportunity to talk about it today. Including the process for accepting, reviewing, and approving or rejecting motor carrier employer applications.
So that’s the update from FMCSA. In other topics, I’d like to just cover some things that we’ve been working on in federal highways at the - in my office, the Office of Freight Management and Operations. And then Ryan I think, will follow up with an additional related activity. I did want to mention, we’re still waiting patiently, so we don’t get furloughed again, the IIJA enactment.
We’d like a reauthorization of our programs. And included in there are some interesting provisions for freight. There are some provisions that do change the requirements for state freight plans. And I think Ryan was going to cover those. But I will say that one of them deals with commercial motor vehicle parking facilities assessments.
And as you know, my office has been focused on truck parking since (NAF) 21 when we did the first survey under the (Jason)’s Law provision, to look at truck parking capacity. So, this is a great new direction for truck parking, to get this included in state freight plans. I think that states are probably well set to handle this provision. Obviously they could use the National Highway Freight Program (formula) funds to pay for any of the analysis, so it’s not an unfunded mandate.
And if they have any questions about doing truck parking analysis, they can actually get a workshop facilitated by Federal Highway Administration in their state, in any of their cities, and here. So, ask for them. So, there are a lot of ways we can help support this. There are six other provisions. I’m not going to walk through them. If Ryan has time maybe he will. But following up on the truck parking item, we also have completed the drafting of a truck parking design guide.
This would help folks looking to develop truck parking, whether they’re public sector or even private sector entities. And we would like to workshop that and get some input before we finalize it. So, our workshop will be held roughly in the November/December timeframe. It will be open to the public and we’ll probably put a notice out through our Coalition on Truck Parking and so stay tuned. If you’re interested, let me know directly. It would be open to the public.
We also are undergoing the mandated, statutorily required update of the primary highway freight system. This redesignation is supposed to occur every five years. It’s a little behind the curve. But we have put out a public notice requesting input. And that notice comment period has been extended to December 15. Right now if you go into the Federal Register you’ll see that the deadline is Monday, October 25. But actually, by Monday there should be a new notice extending that deadline.
We’ll take comments from anybody, but the statute specifically asks for the input of State Freight Advisory Committee. So, there’s another great reason to have a State Freight Advisory Committee. And, you know, we know that some states are new to the game. Ohio and Virginia are recent entrants in the list of states that have a State Freight Advisory Committee. I think that brings it close to 40 if we count the advisory committees that convened for the last period of conducting and developing a state freight plan.
We really hope those advisory committees meet regularly. So this is another good way for an advisory committee to get active and get engaged in looking at the primary highway freight system. There aren’t very many miles to designate, so we proposed a method that deals with the limited mileage available. But other options are able to be commented on.
We have an activity working with AASHTO to harmonize permitting for trucks moving across the country. That tends to be a bottleneck efficiency issues. So a standard permit form or a standard language for permitting forms, has been developed with AASHTO and shopped around the population of states. We hope they’ll start to pick this up and adopt it. We also are hopeful that the remaining 14 states that do not have automated permitting systems will develop those. They can use their National Highway Freight Program dollars for that.
And we’re holding a workshop with those states and some states that have done a really great job with our (unintelligible) permitting systems. And that’ll be held November 9th. The last few bullets here I’m just going to run through in rapid fire. The 24th Conditions and Performance Report has been delivered to Congress. That is a highway and transit performance report. It incorporates the freight provisions that were spelled out in the FAST Act.
So if you’re looking for the latest it’s not the latest, it’s a little bit dated. And the 25th is coming right on its heels we hope. But in any case, the 24th has gone to Congress. If you want a copy of that you’ll have to ask for that from (Rob Crichton) at Federal Highway. The freight provisions that have been added are stuff about Critical Urban Freight Corridors and Critical Rural Freight Corridors as well as some comment on truck parking and state freight plans.
It’ll eventually be published on the Web, but it’s currently undergoing a 508 compliance. And RAISE, the grant program, the announcements for the recent round awards, will be announced hopefully before a statutory deadline of November 22nd. So there’s an update on that. FAF products, FAF continue to come out this year. Please expect by the end of November you’ll see FAF forecast and FAF network truck flow estimates. FAF stands for Freight Advisor - or stands for Free Analysis Framework.
The Vehicle Inventory and Use Survey, which we’ve been working with Commerce and the Bureau of Transportation Statistics, to reenergize last administered back in 2002 I think, will be out in 2023. And there will be some cool new visualization tools. There is some data in new areas of trucking that weren’t any different 20 years ago.
And we also will have a visualization tool next year for FAF so you can look at FAF in new ways. Lastly, we’ve got an update to our freight mobility tool. We are adding emissions information to that. So, anyone who’d like to look at the - not just the cost of the bottleneck and the delay of the bottleneck, but also the emissions associated with that bottleneck, will be able to view that on our freight mobility tool early next year.
And two more things - we work with the rest of the world in an organization called (PARC). It used to be called Rural Road Association. And we’ve been working on a bridge strike issue with them. And the new study on bridge strikes is completed and should be available for public release soon. We’re very excited because we think bridge strikes are a terrible occurrence and we’re trying to look for ways to reduce the incidents of those.
And then when TRB gears up in January I’d just like to draw your attention to a workshop that we’ll be holding on freight and equity, in conjunction with the Urban Freight Committee at TRB. So that’s it for my update. Thank you very much.
Ryan Endorf: Can you all hear me?
Richard Boll: Yes.
Rick Blasgen: Yes.
Caitlin Hughes: Yes.
Ryan Endorf: Perfect. Sorry about the technical difficulties. I’ve been listening most of the day and I know there’s been a lot of discussion about being - John Porcari’s discussion and then (Joe), your questions about state freight plans and how we can incentivize states to think about multistate planning and also about (Joe), your question about specific industries that we can point to states.
And I think - I can’t emphasize enough the State Freight Advisory Committees as a good forum to have those discussions. I think that to the extent that states also should be inviting economic development agencies, which can help point to the specific industries that might be near shoring or reshoring, as well as inviting in some of the neighboring states, and I’ll pick on Maryland here.
I know Maryland’s State Freight Advisory Committee also includes representatives from most of the neighboring states - Virginia, DC, I think West Virginia, Pennsylvania, and Delaware, and some more. I think of that and broadening out those advisory committees, and especially because many of you are involved in some of the state advisory committees. You see how freight is moving across state lines and I think for an invaluable perspective.
So - I think Caitlin mentioned about 40 states have those. If we can get that to all 50, I think that would be a great opportunity, especially since we’re seeing with the congestion and supply chain issues, there are so many different actors at play that not one entity whether it’s the federal government, the state governments or local governments, you know, they need input across the entire supply chain.
So, that’s an existing forum that - or an opportunity that I think we can - we really need to emphasize, especially at the state level. Jessica, you know, mentioned about the Executive Order (14017). The Department as she mentioned, is working on our one-year assessment for the transportation industrial base.
We’ve decided to define the scope of our study to primarily be focused on the freight and logistics sector, which is certainly timely. And so we’ve recently concluded a request for comment in the Federal Register, that closed on Monday. We’ve gotten over 400 comments and we’re skimming through those.
I think there are a lot of ideas and thoughts about what we should be doing, whole of government, not just within DOT’s spectrum, but working with the Department of Commerce, working with the independent agencies like the Federal Maritime Commission, the Surface Transportation Board, as well as other agencies like the Department of Agriculture, and Defense Department, to think whole government, as to how we can build out solutions and make our supply chains more resilient.
I think the focus certainly on the supply chain disruption task force, is mostly focused on the near-term activities. A one-year assessment will I think be looking further afield into the future, as to policy ideas and recommendations for how we can never have to deal with this sort of situation again and prevent the next major disruption across the entire system.
I think many of you have submitted comments already. Certainly, we would appreciate if you have feedback, specific recommendations for ideas, we’d love to hear from you and we’d be happy to meet with you as well, to talk further about these things. But that’s something the Department is working hard on and will be a big effort this fall.
And I think Caitlin did mention the Infrastructure Investment and Jobs Act. Certainly, we’re hopeful that Congress will pass that soon. While any provisions would create a multimodal freight office, and the Office of the Secretary. So, you know, there will be changes that DOT, you know internally, will be managing. And that’s something that I think your feedback would be appreciated there as well. So I think that’s kind of my quick update. I’d love to take any questions, or we’d love to take any questions that you might have.
Rick Blasgen: Great. Well, let’s open it up for questions. Thank you guys, for that. I appreciate it.
Coordinator: If you would like to ask a question over the phone line, please press star 1 and record your name when prompted. Once again to ask a question over the phone line, please press star 1.
Anne Strauss-Wieder: Hi. It’s Anne Strauss-Wieder and you opened my line, so hello, Caitlin and Ryan, and I just want to ask you two questions related to funding. One, a subject near and dear to you is truck parking. Lots of assessments, lots of analyses. We all know it’s an issue. We know it’s also part of the truck driver experience and a major consideration when considering the occupation. So a question there about the ability or providing a priority to help fund solutions.
The other question I’ll hit you with is not necessarily a freight question but really is. And that’s workforce accessibility to freight facilities. We have a lot more people needed in freight facilities, whether we’re talking distribution centers, transfer points, you name it. However, these are not at your typical locations. They’re not in office buildings, they’re not in shopping malls.
And their ability to commute to those locations and it’s shift dependent as well, it’s currently quite limited. Some areas have cobbled together funds through private sources or even using (CMAC) money. But is there any thought given to addressing last mile workforce connectivity to freight facilities, or even looking into how big an issue that is, and what we can do to address it?
And again, that - you’re not going to take a job if you can’t get there for your shift. So with that, thank you and I’ll turn it back over to you.
Caitlin Hughes: Thanks, Anne. Great topics. I’ll take the first one and I have a comment on the second. Maybe Ryan has some more to offer there. There is nothing that can stop a DOT from using its National Highway Freight Program dollars to build truck parking. It is an eligible activity; covers the gamut of truck parking construction needs as well as IT needs.
So that money is there. It’s available. They can save up multiple years’ worth if they want to do some big projects. They can even, because it’s part of the Federal Aid Highway Program, they can even move money from other Federal Aid Highway programs into the National Highway Freight Program that can plus it up, to move up to 50% of most of the Fed Aid formula programs, into other Fed Aid formula programs, and thereby get the new eligibilities in those other programs.
So there really isn’t anything stopping a state from using those funds except competing needs. So that’s why as Ryan mentioned, the State Freight Advisory Committee is a great place for industry to show up and say hey, when you’re programming your tips and (unintelligible) MPOs in states, we’d really like to see money dedicated to truck parking.
And truck parking continues to be an eligible activity under the RAISE program and the (unintelligible) program. We have funded truck parking projects. Most of the projects we’ve funded have been information systems. However, there have been some proponents of projects that incorporated construction of truck parking facilities. We’d love to see more applications with more of that type of capacity expansion because, as you mentioned, that is a great need.
We heard that in the second Jason’s Law survey, as well as the first Jason’s Law survey. So, the need has not diminished. It’s only growing and with the increase in goods movement that we’ve seen during the pandemic and that is projected for the next 20 years plus, we’re going to continue to need truck parking. So, I’m really glad you raised that point.
And then on your second point, I was really impressed when I visited Seattle a couple of years back, to see that they had developed a bike path link to the port, so that port workers did not have to drive to get to work. They could take transit and from transit they could walk from the transit station. Or they could bike as part of their route. So, you know, I’m sure that that’s an opportunity in other parts of the question.
And then just as much as I’m sure of that, I’m also sure that there’s warehouse areas and ports that are not exactly bike path accessible or ideal. But I think there have also been sort of transit solutions with shuttles serving warehousing districts. So I don’t have anything specific to add except it’s probably a good thing to look at both from the context of complete street, as well as in the context of equity.
Oh, and thirdly, climate change - so you know, those are three priorities of the Administration that can be used to talk about why this is important. And then in terms of funding it, lots of flexibility within the federal aid program.
Rick Gabrielson: This is Rick. Well maybe one follow-up to maybe where Anne was coming from. And Anne jump in if I’m incorrect here. But, you know, as far as the mobility goes, I think in many industrial parks where you may have a cluster of warehouses, different types. It could be anything - eCommerce, to just general distribution.
There’s oftentimes a real lack of public transportation going into those areas on a structural basis. And as you typically see those parks develop in their own area, I don’t want to put words in Anne’s mouth, but I think it’d be great to have some sort of program which is going to differ by area, by region, that provides more public transportation on schedules that meet, you know, the schedules within those workplace industrial parks, that would allow more people to get in.
Caitlin Hughes: Yes. And I think that a lot of that is going to fall under the purview of the local government as opposed to the federal government. While there are federal aid eligible activities - (CMAC), FTA, I think that for the most part it’s probably the local government transit systems that want to connect with it. You know, somewhere like Baltimore, of course, you have the state of Maryland that runs the transit system for the state, so they would work with communities to develop the transit stations, adding buses, adding lines.
But I think that conversation is - it needs to be raised up by the entities who are looking for it. And maybe there’s a way to host perhaps a dialog to find out where the interest is. But it’s not my area of expertise, frankly, right now. I do know there are other parts of the agency looking at workforce issues and looking at complete street issues. So, when I get back to the office virtually, after this call, I’ll start poking around, probably with some folks at Federal Highway first, to see if they’re aware of any targeted work in this area. Or if not, what they think might be a good way to get into it.
Ryan Endorf: Yes. I think that’s a really good point just to the extent that that’s an angle that I think we do need to be cognizant of as we confront, you know, labor shortages across every aspect in the supply chain. How can we incentivize workers to take some of these jobs? Transportation considerations are certainly a major part of that decision process. So, thank you for raising that Anne and Rick. I think that’s something that, you know, we’ll certainly be keeping in mind as we do a one-year assessment as well.
Rick Gabrielson: Great. Thank you.
Rick Blasgen: Other questions?
Caitlin Hughes: Perhaps that’s a topic for the new OST Office of Freight if the Infrastructure Investment and Jobs Act (IIJA) builds (unintelligible).
Coordinator: I show no further questions in the phone queue.
Rick Blasgen: All right. I don’t see any in the chat either. So Ryan and Caitlin, anything else that you wanted to mention to the group?
Caitlin Hughes: Well in this John Porcari (unintelligible) I’m not sure what he said about state freight plans, but I will note that whereas the first set of plans needed to be completed by a certain date in order to start using the federal funding, the cycle right now is all over the map because depending on whether it’s state-needed to access that funding or not, they - some of them finished their first one on a different cycle, so they’re now on a rolling basis.
They need to be updated. The state freight plans need to be updated five years from the last time they had one. So, there’s no fixed point at which all the states must, you know, update their plan. There’s just a fixed duration. So, if you have any questions about when the plans need to be updated by state, you can reach out to my office. Tiffany Julian is the point person on that.
Florida has already completed their first five-year update. So they have now their second state freight plan which we’ve approved and is available on their Web site. And we’ll be looking at the rest of them as they come in. I’m hoping that they get bigger and broader and multimodal like Ryan was speaking of. But that’s just a point to mention. And if the new law reauthorization comes to pass and is enacted with the provisions that are added, the 70 provisions, we expect the states to try to incorporate those to the best of their abilities. So, we’ll provide some guidance on that later.
Man: I need to ask John about that, Caitlin, around whether state freight plans are coordinated between states at least in regions. Is there any activity between states around that? Can you comment on that?
Caitlin Hughes: Yes. We had - we did an analysis of the first round of plans to see how many of them incorporated a multijurisdictional focus. Did they look at their partners’ plan? There were a few who did that. You know, it’s sort of the Maryland, Delaware, Virginia region tends to be one where there’s a lot of coordination. And the northeast in the New England states, they have had a history of collaboration.
I don’t have the specific table from our analysis, that shows who did well at this and - but I can say that it is an area that we have highlighted for the states going forward, as an area for improving in their plan. We ran a series of workshops in June for all of the states to talk to them about best practices. And that was something we highlighted - the need for either quarter-based or, you know, bordering state communication to look at more broader regional planning.
Rick Blasgen: Right. Good. All right. If there are no further questions can we - go ahead, please.
Caitlin Hughes: I’m just going to answer the one from Jonathan Rosenthal, if it’s okay to reach out to me with additional questions or ideas. Sure. I’m going to put my phone number and email address in the chat and you can follow up with me at any time.
Rick Blasgen: While you’re doing that, Paul Bingham has asked how many state freight plans by border states coordinated with Mexico or Canada.
Caitlin Hughes: Again, I don’t have that information off the top of my head. They tend to have looked at freight in the past through two different multi-country coordinating committees - the Joint Working Group and the Transborder Working Group. So those activities, I think, didn’t focus as much on freight in the last Administration. I don’t know if they’re going to gear up this time. But that tended to be the place where the more specific planning activities occurred.
And perhaps conversations are ongoing, especially like between provinces and states. But the - I’ll take an action to see if I can get the table from our as yet unpublished analysis of the state freight plan that shows that the coordination, and if it doesn’t reflect Mexico and Canada, then I can check with our international office and see if they’re aware of any additional activity.
Rick Blasgen: Great. Thank you. All right. Ryan, Caitlin, thank you very much. We appreciate your continued support of our committee here, and your willingness to participate in pretty much every one of our meetings. So, thank you, very much for that.
Rick Gabrielson: Thanks, Caitlin. Thanks Ryan.
Ryan Endorf: Absolutely.
Rick Blasgen: All right. Well, we’re right on time, so we’ll move onto our committee reports. First up is Anne Strauss-Wieder. Anne, I know you’re available here, I see you there, for workforce development. So, Anne, go right ahead.
Anne Strauss-Wieder: Thank you, Rick. And good afternoon, good morning, or good evening, depending where people are. We heard this morning - and many thanks to the US Department of Commerce and everyone for sending us such fantastic and informative presentations today. Ask any supply chain executive what keeps them up at night right now and they’ll tell you labor shortages and skills gaps.
This was an issue prior to the pandemic, and as was discussed this morning, the pandemic has really shown us where we have issues that have to be addressed, not just now, but in the longer term. Since our last meeting our subcommittee has continued to meet to hear ideas. Thank you, John Gold and effective practices, not just again for the short term, but in the longer term. And anticipates bringing additional recommendations and effective practices for the full consideration of the committee.
In the meantime, what else is going on? First of all, it’s made national news. We have shortages. And to be clear, what do we mean by a shortage? It means that we are not attracting enough people into the occupation and we’re not retaining enough people in these occupations. So what do we need to do to attract and retain? Well, first of all, is marketing the opportunities, figuring out what skills are needed.
It also means, to some degree, that we can’t let others vilify the professions which is sometimes common. Instead, we should be applauding again, as noted by a lot of the people today, the very hard work being done and that needs to be done, as well as the career opportunities. Second, is to again look at the underrepresented demographics and responsibly see how we can expand it.
You know, we’ve heard about the Under 21 program, both for the military and folks who are not in the military. What can we do to bring people into the field? I already asked the question of US DOT. Part of improving the worker experience is providing that last mile connectivity so prospective workers can get to these new job places, knowing when the shifts are and having a variety of options available to them, and really helping it along.
And this is a seismic shift, you know, from people working in offices and stores to having these other locations that are equally important, whether we’re talking distribution or, for that matter, production, making sure they can get there. You know, we’ve noted about pay and benefits. The private sector really has stepped up quite a bit about it. And also considering technology, not automation that replaces a job, but changes the nature of the job. And we’re seeing a lot of that occurring.
And indeed, some of that technology may be helpful in, you know, addressing the shortages, making the jobs more palatable, and moving forward. So, a lot that’s going on; a lot that we could focus on now. It’s good to hear about all the collaborations going on among the federal agencies. And again, we hope both to highlight some effective practices going on, on the local level, technologies that may be useful, and again in improving the worker experience.
And then also and I think we’ve done this now for several years, focusing on accessibility to these freight operations and making sure people can get there. So, at this point, I’ll open it to anyone else on the subcommittee as well as to any questions. Thanks very much.
Rick Blasgen: Thanks, Anne. Questions from folks?
Coordinator: If you would like to ask a question, please press star 1. Once again, to ask a question over the phone line, please press star 1.
Rick Blasgen: Or if you want to put something in chat, we can pick that up there, too.
Anne Strauss-Wieder: Well, seeing none, we will be having additional meetings of the subcommittee and we’ll be keeping people informed about the topics. And other members of the committee are most welcome to join us when we have these get-togethers, to hear about effective practices and ideas. So again, thank you so very much. And it really has been almost inspirational to hear about all the good work being done; what Pfizer brought to bear; and the ideas being put forward to adjust things moving into the longer term. So, thank you, again.
Coordinator: Excuse me. We do have one question. Thank you.
Rick Blasgen: All right, Anne. Thank you. Oh. Please go ahead.
Coordinator: Our question comes from Libby Ogard. Your line is open.
Libby Ogard: Yes. This is a question for Anne. I’m sorry I was a bit slow trying to navigate the keypad here. But one of the things that I’ve noticed during the pandemic is a lot of the wages have increased in many jobs. And are the supply chain wages keeping pace with those increases? And are you tracking supply chain compensation to see if it’s keeping pace with other jobs with similar skill sets?
Anne Strauss-Wieder: Libby, that’s a great question. I can virtually turn to people like Bob Costello and others who may have better information than I do on this. But certainly, you know, in terms of say, even unskilled hourly work at distribution centers, the hourly rate probably at this point exceeds what is being offered at retail establishments, plus adding in the benefits, whether it’s educational benefits or other, you know, benefits.
So, you’re really seeing this brought to bear. Certainly in the trucking industry the average wage has gone up, I do not have those numbers in front of me, as well as signing bonuses. So, I think the industry has responded in that regard. But it’s not just as pay and benefits. It’s also the experience of the job. And I think we see that in any occupation these days as we work through why people are leaving their jobs in various areas.
But really thinking about that worker experience - what do we do to make it better perceived to be a driver or to work in a facility or even consider supply chain? We have to market that. We have to make it attractive. And I think we’re going to be seeing people do that. I was on a CSCMP webinar earlier this week that included folks from the UK, where they’re having a very severe driver shortage. And just the call for drivers has apparently led to a lot of people applying now, recognizing the criticality of that occupation.
So, you know, I think it’s a great question and it’s something we can perhaps look into and work with others in the federal government to try to answer perhaps before our next meeting. So thank you for asking it.
Rick Gabrielson: Anne, I might just add one that we’ve talked about in the past. And I know that you’re aware of this, but I’ll just add it for Libby as well. And that is it’s not specifically with truck drivers. Some of it’s also the working conditions and the experience. So, you know, if you’re running a distribution center and you don’t have proper facilities or you do not have the ability for them to get a sandwich or a cup of coffee or that type of thing, that also plays a big part into it.
And more of the progressive, you know, trucking companies are using an app. And they allow their drivers to use those apps, we’ve talked about this in the past in our group, to provide feedback on that location. And that carrier, if they’ve got that relationship with that shipper or, you know, (unintelligible) they can go through and provide feedback to them and it helps make them more aware that in order to keep people you need to go through and provide a good experienced one as well.
So, that enters into retention and oftentimes is more - pay is obviously a big piece of it; working conditions are also a big piece of it. Other questions for Anne?
Rick Blasgen: Heather, no questions on your end either, right?
Coordinator: I show no questions in the phone queue.
Rick Blasgen: So, Anne, thank you very much. We appreciate it. And now I’ll move along to freight movement with Rick Gabrielson. So really, Rick, thanks so much.
Rick Gabrielson: Thanks. Taking on to what we had done in August, our subcommittees met and came up with some additional recommendations for our group to discuss, review and hopefully move on with today. Certainly, it’s, you know, every day it seems like in the nightly news there’s another anchor taking and doing their nightly program from one of our ports. And, you know, a number of our folks on the broader committee have interviewed for the nightly news. So, certainly we’re all aware of, you know, congestion.
And there’s not a silver bullet. There are many things that need to be done. But a little bit at a time will certainly work on being able to address maybe more of the immediate issues that are at hand, but also hopefully, there are lessons that we can learn to put forward for going forward. So, our group, has gone through and we’ve come up with a set of four recommendations. Some are a little bit longer term or medium term, some hopefully could be more immediate. Pieces of each of them could be more immediate.
And we did get feedback, you know, from Bob Costello, and fellow and I put that in red on the third item. But I thought what we could do as a group would be to walk through each of the items; take feedback on that. If not, move forward. And, you know, provided that there are not significant changes then we can go through and take it to a vote and a motion and move forward from there, and move these up to the Secretary as soon as possible.
Some of these we’ve talked a little bit about in the past. There are themes that actually we’ve gone through and talked about or some of our speakers have spoken about today and we’ve been talking about for a while. So, it’s all coming together I think, nicely. So, if I kick it off, and (Joe) and other members please jump in as you would like, as we go through here.
The first one is the Department working with the private sector and members of the White House Supply Chain Disruptions Task Force, should work with each major US container port and the stakeholders, to establish a short term public private supply chain congestion crisis collaboration group, (unintelligible) an acronym would work, in each port that identifies and immediately utilizes all available stakeholder and federal government resources, to expedite the movement of container cargoes end to end, between that port and its cargo owners and users.
And I’ve heard that particular recommendation is one where we’ve heard comments from some groups that, you know, the time for talk has ended and we need to really get some action. I don’t think we can really have a solution that works in every single port. You know, the old saying is when you’ve seen one port, you’ve seen one port.
But I do think it’s got to be action-oriented and they should be - there may be short as well as some more medium-term things that could be done. We talked about (unintelligible) yards and some of that stuff that would look different in certainly different gateways or different ports. And I think that really needs to be done to ensure that the stakeholders within those communities, are being heard and I think importantly with that, that that task force is hearing from the diverse group of stakeholders that are in those communities.
So, that’s why the group recommended that first item. With that, I will pause and see if there are comments from folks on that one.
Rick Blasgen: Thanks, Rick. Any comments by our committee?
Rick Gabrielson: Okay. Maybe I’ll jump to the second one?
Rick Blasgen: Okay.
Rick Gabrielson: The department should work and partner with federal agencies, to incentivize US ports, terminals, stakeholders, including trucking providers, railroads, and shippers, to implement customized information sharing technologies based on an agreed upon set of standards in cargo status and location data elements, and made accessible supply chain wide, helping stakeholders to optimize their resource usage, and to improve cargo movement fluidity and operational efficiency throughout the ports’ supply chains.
It’s important I think, that we remain platform or systems agnostic and I think the piece that I think is vital is that there are uniform standards that are established. And when we do that you have an open platform and you’ve got the ability then for different platforms or systems, whatever those regions may want. But if it’s a uniform set of standards that can then flow up to uniform information.
So, rather than trying to single out individual applications or systems we wrote it at that higher level, but there is clearly a definite need for more data sharing and more information, to be able to be shared. I love the conversation with Pfizer this morning and how they share information back and forth. And I think that benefit is really applicable in this particular situation.
We have to get all of our, I think that, and I’m not advocating that proprietary information be shared by any means. But there’s a lot of information that can be shared that would help all the stakeholders too. And I think to the point that Jonathan made earlier today, you’re able to just increase your term times or your performance, by 20 minutes or 30 minutes. And you’re able to move more cargo. That’s got immense benefits in this client change. So, that’s the intent of that particular action item, and of course that’s been - was talked about earlier this morning as well, by one of our speakers, (Gene) I believe. Questions or thoughts on that one?
Okay. Let me move to the third one. To alleviate the severe shortage in available truck drivers during the supply chain congestion prices, the Department working with the Department of Defense, partner federal agencies, US ports and trucking company leaders should immediately promote and facilitate volunteer opportunities at US trucking companies, as well as compensated activities to the extent allowed by the Department of Defense in state ethics rules for trained US military truck drivers veterans, and National Guardsmen, to help move cargo from sea ports to end users.
The Department together with the Department of Transportation should work with the US insurance industry, to help or to resolve impediments to that effort. That’s been an impediment in the past. And then the piece that I added for Bob - a small industry stakeholder group should be developed to work with the Secretary and agencies, to determine the action steps necessary to implement this recommendation.
This is broad. It’s thinking outside the box. On the other hand I will tell you that we’ve been talking about this for a few weeks and over the course of the last three or four days, I’ve put a number of recommendations from, you know, different groups talking about the need to use National Guardsmen where possible. The intent behind it is yes, there’s a shortage of drivers; yes, I’m beginning to learn there’s also a shortage of trucks.
Some companies are going through and having to cannibalize trucks for parts, to keep others going, because of chips and part shortages and that type of thing. But in talking with a number of trucking companies they do have trucks up against the fence. And they could use some support. And I didn’t want to sit with the group and try to determine which ports, which trucking companies, which domestic providers get support.
But rather, if there’s a group that can be pulled together and you can remove some of the barriers for this to happen, and as long as these individuals do so on a volunteer basis, and volunteer does not mean not getting paid by the way. But that groups that determine what are the right pay compensations; how does it look; and how do you go through and use those resources that are there?
We talked about trying to have the ports open 24 hours a day. Sometimes there aren’t enough hours for those truck drivers to hit a (unintelligible). So, we utilize additional people that can take up some of those hours. And you can move some additional containers. That may help to a certain extent. It doesn’t solve the entire problem, but it may help go through and get some cargo moved which helps in the congestion.
And the other piece that’s more subtle in nature is that, you know, we’ve talked a long time about drivers who have had military service; they get out of the military; they may like to continue as a truck driver, but their time is really not recognized by the insurance agencies. And maybe this is the foundation for making some of that happen. So, those individuals that come out of serving our country and would like to continue that as a vocation, and that might maybe provide the platform for that to start to happen. So, that’s the intent behind that recommendation. Thoughts or comments?
Heather Sykes: Hi, Rick. This is Heather. I see a comment in the chat that Jonathan Rosenthal was trying to open the line.
Rick Gabrielson: I didn’t see anything on my sheet here.
Rick Blasgen: Yes. I see it in the chat. Jonathan, did you want to speak with Rick?
Coordinator: It looks like his line has dropped. If he has dialed in on another line, if he would press star 0 I can open that line.
Rick Gabrielson: Yes. Because I didn’t see anything here on mine.
Heather Sykes: Thank you.
Rick Gabrielson: Sorry about that. Jonathan, are you out there?
Man: …answered the question.
Rick Gabrielson: I’m sorry?
Man: In the chat it says Rick answered the question. So, it sounds like…
Coordinator: Jonathan Rosenthal has an open line now.
Jonathan Rosenthal: Sorry. Rick, I’m sorry. You were raising an issue and you answered the question. And I don’t need to belabor it. So - thank you. Thanks for the presentation.
Rick Gabrielson: Okay. Thank you. The last item we have came from the group based on where we’re at with chassis availability, which is a big issue in a large number of our ports. And some of it could be that there’s simply not enough; some of it may be tied to actions that took place beginning the last Administration with the tariffs and stuff. But a lot of it is pure production. And we’re simply not able to keep up with it.
So, the recommendation was (unintelligible) to expand limited US container truck chassis availability. The Department should work with partner federal agencies, to establish a $1000 per chassis or more as needed. We used it as an entry point. Investment tax credit or rebate for US truck chassis manufacturers, in order to simulate increased US truck chassis production.
Two, provide a onetime grant to US truck chassis manufacturers who establish new US production sites or any production site, and who commit to producing an agreed upon minimum number of container chassis per year. So, if you want to stimulate new manufacturing, agree to a minimum that would really help jumpstart the need that we have in our country for chassis, there’s a very large percentage and that number varies based on who you talk to, that will tell you that, you know, a very large percentage of those chassis are 15 plus years old.
A number of them are in a repair status where they’re beyond their useful life. But they may be in use because there’s such a shortage of them out there. So, this is a huge need. And the last item was to spend for two years, US (unintelligible) chassis manufactured in China. But those three kind of needed to work in conjunction with one another. So, that’s the fourth recommendation we have. And we’ll stop and ask for questions on item number four.
Man: Rick, can you comment on the $1000 per chassis figure? I know that there probably wasn’t a ton of (unintelligible) done around that, but at least a start.
Rick Gabrielson: Yes. I don’t know if Jim Newsome is on today, but it came up where there needed to be some kind of an incentive we thought, as investment tax credit for the manufacturers to help stimulate manufacturing. Because the costs could be, you know, more expensive at this point to produce in the US versus what you might see coming out of a foreign country.
And the thought is, if you’re able to go through and provide an investment tax credit that makes them more compatible, that may help drive on a limited basis maybe, more production in the US to get that back here, because you could maybe turn it a lot faster. The second piece is you’ve just got to increase production overall because it’s simply not enough. You’re maxed out. So, could there be some incentives to increase that as well?
And the White House says - and you have to have those first two to do the last one, which is can you put a temporary suspension on those kinds of (unintelligible) again, to stimulate it in a number of different areas to get more chassis into the country?
Rick Gabrielson: Okay, if there are…
Rick Blasgen: Any questions for Rick? Sorry, Rick.
Rick Gabrielson: That’s okay. If there are no questions on that I guess I, at this point, would maybe Rich, we can open it up for the group, open the lines and we could maybe call for a motion from someone to approve the recommendations and second it, and then do a vote? So Valerie, if you can open up all the lines, please, if you’re able to do that.
Coordinator: Our first question comes from Libby Ogard) Prime Focus LLC. Your line is open.
Libby Ogard: Hey, Rick. I was wondering if you would consider a friendly amendment to potentially the first bullet point that establishes a certain level of quality of this chassis, that would be eligible for the $1000 per unit incentive? Those chassis would need to be equipped with LED light and radial tires.
Rick Gabrielson: Well, I - great suggestion. I personally always use radials on mine and had RFID tags, which one of the manufacturers have in the US. Radials will last longer. The RFID tags, it’s not to the extent that, like Jonathan would describe with the efforts that he’s got, but it does allow you to know where it’s at. But I guess I - my only question would be not every shipper will understand the value of that and they may not necessarily want it if they’re having to go through and pay for that extra.
And I’m not sure that you want to tell the manufacturer that they have to put certain components on it as a standard radial device on. And as far as the tag goes, RFID tags can take many different forms and many different manufacturers. And I’ll go back to my comment on systems Libby, that says, I think you need to be agnostic when it comes to that type of thing. So, while I personally agree and if I were writing the check I would personally do that. But I don’t know if we want to dictate how that should look, if you understand where I’m coming from.
Libby Ogard: So, Intermodal Association of North America has done several surveys and have had a fairly active operating committee. And the drivers certainly appreciate radial tires as well as the LED lights, because there are fewer breakdowns on the road; there’s less wait time for - in the trouble lanes if they have to get a light bulb replaced. LEDs have higher levels of performance and productivity.
And the reason I was making this suggestion, it doesn’t need to necessarily be a specific RFID tag, but a tracking option might be something to specify. And the reason I was making the recommendation is to improve the driver experience, improve efficiency and productivity, and just establish it as a minimum standard.
Rick Gabrielson: Again, I come back to I agree with those things, LED as well. But again, should we be dictating what that should look like when a user that might be going - that’s doing something different, may not necessarily want that, Libby. I think it’s fine, you know, for someone to go through and say consideration should be given to these things, but I don’t think you want to mandate it. I really don’t. Now it’s certainly open for debate to the rest of the group, but that’s just my personal opinion.
Rick Blasgen: Well while we’re noodling that one around, I know Joe Bryan has a comment to make. Joe? I’m not sure if his line is open. Joe Bryan? Joe.
Coordinator: If he could press star 1 I can open his line.
Rick Blasgen: Thank you. Joe, did you hear that? Press star 1.
Coordinator: Joe Bryan, your line is open.
Joe Bryan: I should be open now, right?
Rick Blasgen: Yes.
Joe Bryan: Okay, good. The point I want to make around number two is that we should in time, generalize the capability that we’re developing here at the ports, and bring it to our inland hubs, places like Chicago, where we also have similar logistical difficulties that could be addressed in the way that they can’t be addressed at ports as well.
I do not recommend we change the wording on this at all, because I think we should keep our focus on the stuff that most needs to get done right away. But I think we should plan on extending this once we get this capability in place and take those lessons and apply them to our hubs as well. That’s a…
Rick Gabrielson: Great. Thank you, Joe. Let’s go back to Libby’s comment. I’d like to hear from others if that’s something that we should put in or not. Comments from anyone?
Rick Blasgen: I suppose we should leave the document as is then, Rick?
Rick Gabrielson: Yes. I mean if, you know, if there are others that would like to weigh in, great, I’d love to consider it. Again, I personally agree with it. I just don’t think we should be dictating what people should have. I agree with everything you said, Libby. I just don’t know that we should be telling manufacturers and the consumers what they should be using, while I personally agree with it.
Coordinator: We have another comment in queue. The next comment comes from Neely Mallory, Mallory Alexander. Your line is open.
Neely Mallory: Thank you. I just want to say I agree with Libby. We should encourage these manufacturers if they’re going to get a tax credit to do it the right way, not the cheap way.
Coordinator: And our next question or comment comes from Leslie Blakey. Your line is open.
Leslie Blakey: Thank you. With respect to the tax credit issue, first of all, tax credits are really, really challenging. This is something that has to be written into the tax code by Congress that cannot be done administratively or through the Executive Branch. There are a huge number of tax credits that have been issued by Congress over time and they’ve become an extremely contentious issue for Ways and Means and the Tax Writing Committee. They’re very much frowned upon.
And as a result, it’s very hard to get them. And you really, really have to show some strong public purpose in issuing these or getting them written into the tax code. And as such, Rick, I just want to make one point with respect to our perspective here. When you say we shouldn’t be mandating, keep in mind that question of public purpose. It is not us, the committee that would be mandating or, you know, we’re not writing this up.
Congress, should they decide to take the committee’s recommendation on this, is well within its rights. And actually, it’s appropriate use of the tax code to require good public policy, which means on this issue of if it’s the right thing to do from a public policy point of view, then it should be recommended by us to Congress, coupled with the recommendation for a tax credit.
So, I just want to put a perspective on that because, you know, we tend to look at it from - as private individuals or private companies participating on this committee; who are we to mandate? But I don’t - that’s not the perspective you should have. It’s the perspective of Congress and good public policy and to the public benefit that a tax credit could conceivably ever be issued by Congress on this.
Rick Gabrielson: Okay. Thank you. Other thoughts? If not, I’ve got one suggestion to make then, is if you want to scroll down and Rich I don’t know if you’ve got the ability to make a change, I could read it to you if you or someone could type it up. Can you scroll down to item number four so the team can look at it? I’m not sure who’s in charge of the screen. Rich, is that you?
Richard Boll: Rick, it’s not on your screen?
Rick Gabrielson: It’s on my screen. Scroll down to number four so the team can look at number four. I can only see number two on mine. Maybe it’s me.
Richard Boll: All right. It should be up.
Rick Gabrielson: Okay, here we go. Never mind. My error. So, under item number, bullet point number 1 and Leslie and Libby weigh in on this, if you would, please, as I read it out. So, if you’re able to make an edit as I speak, under the first bullet point, after the word production.
Eugene Alford: Hey, Rick (unintelligible) I apologize for interrupting. This particular screen share does not allow for edits. So, this is the actual document that it’s uploaded on the WebEx. So, I can make it and then reload it. That’s kind of a problem.
Rick Gabrielson: So, what I would say is this, we keep that first bullet point as it is and under - and right after the word production, consideration should be given to the use of radial tires, LED lights, and tracking options in the manufacturing process. If we add that statement, Libby and Leslie as you, did that address it?
Richard Boll: Rick, could you reread that, please?
Rick Gabrielson: Sure. Consideration should be given to the use of radial tires, LED lights, and tracking options in the manufacturing process.
Eugene Alford: Okay. Give me one minute and I’ll have it up.
Rick Gabrielson: Valerie if you could open up Leslie’s line and open up Libby’s line, please?
Coordinator: Yes. If they would hit star 0 I could open those lines. Once again, if they hit star 0 I can open the lines, please.
Libby Ogard: Thank you, Rick. I accepted the revision in the chat box.
Rick Gabrielson: Thank you. Oh, I just see it now. Thank you. Okay. So, we made that change. So, that would address what Leslie mentioned, what (Neil) mentioned, and what (Libby) mentioned. Any other comments before we open it up for a vote? Okay. I take it that that is it. If you’re able to open up all the lines (Valerie), that would be good, so we could hear from everyone, please.
Coordinator: Yes. Just one moment. All lines are open.
Rick Gabrielson: Okay. Can I get a motion from someone please?
Neely Mallory: So moved. This is Neely Mallory.
Rick Gabrielson: Is there a second?
Rick Gabrielson: Who was that that seconded it?
(Charles): That was (Charles). Second.
Rick Gabrielson: Thank you, (Charles). Okay. Having a motion and a second, can we get a vote from - for all of those who approve say aye.
Rick Gabrielson: Anybody who doesn’t approve, nay. Great. So moved. Thanks, everyone for all your hard work in moving these forward. We’ll make that one change and we will get that up to the Secretary. hanks, so much. With that, I’ll turn it over to Rick.
Rick Blasgen: Thanks, Rick. Norm Schenk - Norm, are you with us for an update on trade and regulatory?
Norm Schenk: Yes. I’m with you. Can you hear me?
Rick Blasgen: We can. Have at it.
Norm Schenk: Okay, great. Well, thank you Rick and again, thanks to everybody, for all the great presentations, and more importantly, the work that goes in behind it. So, I have a relatively brief update on the trade and regulatory side, building on the discussion with CBT this morning. Our subcommittee is evaluating, you know, a number of possible recommendations to work on. And a lot of those are certainly around border-related issues.
And what we’ve decided to do on the two bigger bucket topics which we’ve talked about in the past, was rather than take a world peace type approach for everything, we’re going to split our work…
Richard Boll: Did we lose Norm?
Rick Blasgen: Yes. Did we lose him?
Coordinator: Just one moment, please. It does look like his line is still in. Hello, Mr. Schenk, are you able to hear us?
Rick Blasgen: Norm, can you hear us? Strange.
Coordinator: Do you still see him connected?
Coordinator: I do. One moment, please. Hello, Mr. Schenk, your line is open.
Rick Blasgen: Norm, are you hearing us?
Richard Boll: Can anybody hear me? This is Rich.
Coordinator: Hello. This is the Operator. I still do show that Mr. Schenk’s line is in. Possibly if he could disconnect and dial back in. Would you like…
Rick Gabrielson: Hey, Rick, are you still there?
Rick Blasgen: I am. I just shot Norm a text, but I’m not sure if he got it.
Rick Gabrielson: Okay. And is Rich having a problem hearing, too?
Richard Boll: Yes. I can’t talk.
Rick Blasgen: But we just heard you, Rich.
Woman: I can hear you.
Rick Gabrielson: Yes. We just heard you.
Richard Boll: Okay. You can hear me now?
Rick Blasgen: Yes. We hear you.
Rick Gabrielson: Yes.
Richard Boll: Okay. It wasn’t working at all here. Okay.
Rick Blasgen: We just lost Norm, but we see that he’s on the call, and Heather says he’s on the phone line here. So, we’re trying to raise him.
Rick Gabrielson: Can we jump over to Mel and see if she’s available until we can reconnect with Norm?
Rick Blasgen: Yes. I was thinking that too. Mel, are you still with us?
Richard Boll: I think Mel and both Nick had to go to another call I think, at 3:00. I think we can go through to Dana. I think he might be on the line. I talked to him earlier. Maybe he can (unintelligible) because I’m not sure if Mel or Nick are on. If they are, let us know.
Man: Norm should be back on.
Coordinator: And I do show that his line is open.
Rick Blasgen: Norm, are you with us?
Coordinator: If he could press star 0 I could pull out his line. Norm has joined on an open line.
Rick Blasgen: Thank you. Go ahead, Norm.
Norm Schenk: Can you hear me now, Rick?
Rick Blasgen: We can. We’ve got you now. Thank you.
Norm Schenk: Okay. Great. My apologies. I could hear all of you but I was just talking to myself. So, my apologies. I have a brief update. So, our subcommittee has been evaluating what possible recommendations we can be - work on, and most of them are related to border clearance issues. And so we’ve been talking about how to approach it.
So, we’ve come up with two primary buckets. The first one is to focus on some recommendations on the (CTPAT) program because we think we can put those together pretty quick. I know we’ve talked about it on some other calls on that one. So we’re going to do that one separately. And then we’re going to have a broader topic which brings - which is really more on customs modernization as a whole.
And kind of the overarching guidance for that would be - one is connecting the dots. And again, you know, CBP is working a lot of good things, but more that is tactical. So, we need to make sure we’re connecting the dots on that one. And then two is to look at really what does the best look like? So, I won’t go explain on each one because a lot of people know what they are. But we’re looking to incorporate 21st Century discussion, the (MOD Act) 2 discussion, the data model, the use of new technology including x-ray and artificial intelligence, and automation for that.
And we talked offline with CBP and we’re going to set up a series of separate comparisons for our subcommittee, to focus on that one. There is one particular topic I did want to mention. I have a question associated with that, is that the CBP - there was a Federal Register notice that was issued recently on the global business identifier.
And there’s a 60-day comment period. And we haven’t discussed this one as a subcommittee yet, so I’m going to be clear here, this is my personal opinion on this one. And they’re looking to get feedback on the use of three separate and unique numbers as identification numbers for equipment into the US. One is a legal entity identifier, one’s the - actually it’s the GS1. And then the third is it does notice. And my personal opinion is this would be absolutely devastating to supply chains and border clearances for a lot of reasons.
And we would definitely need to look at that. But my question kind of is and maybe I’ll just finish it and you can answer it, is are - as a committee, are we allowed to comment on Federal Register notices? It says they’re open to general public and other federal agencies. I don’t know if that qualifies us or not. But, you know, if not, we’d have to get with our members and file.
But this would be again, I can’t think of any other word to use, other than devastating. Particularly it would be very discriminatory to small and medium-sized businesses who would have almost no capability to meet the requirements. So, I’ll finish my other couple of comments and then you can ask on that one. And then the other item we’re looking at and having discussions on is the use of these signatures.
Actually what CBP has used for a long time but we’re looking to expand that out and possibly have a recommendation so they could be used for things like trade agreements and/or utilized more for other government agencies. So that’s - those are the key things that we’re going to be looking at. And (Rick), so I’ll flip it back.
And I don’t know if Richard, Gene can comment on that, but it would be helpful to have some guidance on this Federal Register notice if that’s something that we could address as a subcommittee through the committee, assuming we can get it done in time, which shouldn’t take that long to do, or that’s something out of the realm of what normal protocols would be.
Rick Blasgen: Rich, can you address that?
Richard Boll: Hey, Norm. You know, I’ll double check, but I’m pretty sure that, you know, our recommendations have to go directly to the Secretary of Commerce.
Norm Schenk: Okay.
Richard Boll: So, it wouldn’t be able to go directly to the Federal Register notice. But with that said, you know, individual people on the committee can do that on their own individual basis. You know, we can’t say they’re, you know, it’s in comments about our advisory committee, but they can do it as an individual person in their own company. But - and you can’t identify yourself as - any comment you do you can’t say it’s part of that committee, of our committee.
So, you know, I’ll double check that but I’m pretty sure it - everything has to go through to the Secretary of Commerce and not directly to a Federal Register notice.
Norm Schenk: Okay. So, we actually could make a recommendation then up to the Secretary on that?
Richard Boll: Yes.
Norm Schenk: Okay, great.
Richard Boll: But by doing that, you know, how would that be able to get in the Federal Register notice? That would be the other problem. We could talk offline about that. But I don’t see how that would be feasible if we don’t get it done quick enough.
Norm Schenk: Okay. And then my apologies again, I should have started off my update this way, was that we wanted to - we’re having a little change in the co-chair with that, so we wanted to thank Gina for all the great work she did. She’s still active with the committee on there and in fact I was communicating with her yesterday on something. But I want to thank Gina for being the co-chair and Juan’s taking over as the co-chair.
And Juan has been really active in our discussions going back numerous years, and is very knowledgeable in a lot of things. And again, we want Gina. And we can’t really say, welcome Juan, because he’s already been very active with us. But we’re glad that he’s stepped up and willing to be co-chair. So, that’s it for me, Rick.
Rick Blasgen: Okay. Thank you very much, Norm. Any questions from the committee, for Norm? Okay. Hearing none, Mel you’re still not with us, correct?
Richard Boll: Yes. I do not see Mel or Nick. I got an email earlier saying that they’re probably going to be out after 3:00 or something of that nature.
Rick Blasgen: Okay.
Richard Boll: So, I think we’re going to have to skip them for this evening.
Man: Mel’s showing there, but I don’t - that doesn’t mean that she’s on. You know, she’s showing on.
Rick Blasgen: She might be on the WebEx, but not on the phone. But Dana is with us. Dana, can you hear me okay?
Dana Goward: I can hear you fine. Can you hear me?
Rick Blasgen: We can.
Rick Gabrielson: Yes.
Rick Blasgen: I’ll introduce you briefly, and we’ll turn it over to you. Mr. Goward is retired from the Federal Senior Executive Service, having served at the Maritime Navigation Authority for the United States. As Director of Marine Transportation Systems to the US Coast Guard he had led 12 different navigation-related business lines budgeted at over $1.3 billion a year. He has represented the US at IMO, IALA, the UN anti-piracy working group, and other international forums. A licensed helicopter and fixed wing pilot, he has also served as a navigator at sea and is a retired Coast Guard Captain. Mr. Goward is a member of the National PNT Advisory Board and is a Senior Adviser to Strategic Command’s Purposeful Interference Response Team.
Dana, thanks for your service. And we’ll turn it over to you.
Dana Goward: Well, golly. Thanks. I didn’t expect that, but thanks very much, Richard. And good afternoon, ladies and gentlemen. And thanks - thank you all, for the opportunity to speak with you and offer a few I promise, brief comments, this afternoon. So, here’s a story from the future. It’s a sunny fall afternoon in the year 2023. All of a sudden, (unintelligible) MapQuest, directions from Google Maps and similar applications stop working.
Lots of drivers are lost and confused. There’s a vehicle accident spike. Traffic jams quickly build in major metro areas. First responders have difficulty finding routes through traffic and they’re having problems with their land mobile radios. Uber and Lyft are completely disabled. And other delivery services are on hold. Data systems are disrupted, and many logistics systems malfunction.
After about cell phones and other networks start degrading. By the time GPS service is restored four hours later, the US has had more 20 more traffic fatalities than normal, port delays are backed up $200 million in additional costs. And three large drones have crashed, one nearly hitting and killing an individual on the ground.
So, I’m sure that you all know that positioning navigation and timing, or PNT services, are essential. They’re supply chains. And right now these are sourced almost exclusively directly or indirectly, from GPS. But there is also a competitiveness issue here. So, some other nations, most notably China and Russia, have terrestrial alternatives to signals from space, that their citizens and supply chains can use even if they never get signals from space again.
This is also a huge technology and national security gap in the US, but it does impact the long-term competitiveness of our supply chains. So, it strikes us that this issue is something your advisory committee might be concerned about and want to advise the government on. Our organization, the Resilient Navigation Timing Foundation, is a scientific and educational nonprofit that endorses no products or services. But we do advocate for policies and systems to protect GPS signals and users.
One of the things we’ve been supporting and urging over the years, is for the government to follow through on past promises and to comply with the 2018 law to establish one or more backup and complementary system to GPS, so that it’s no longer the single point of failure that a DHS official, during the Obama Administration, called it. So this - doing this will help take the bull’s eye off of GPS for our adversaries.
It will also make GPS more useful and resilient when it’s combined with the new systems. And it will also ensure Americans have something to use when GPS isn’t available. Because one of the many threats that we list in the materials we’ve provided you, has come along and disabled it. So, we ask that you join us in urging the Administration to move forward as quickly as possible, to comply with the National Timing Resilience and Security Act of 2018, and establish one or more alternatives to GPS for Americans to use.
Thanks, again for the opportunity to speak. I’m happy to answer questions if you have any, on your agenda and timeline.
Rick Blasgen: Great. Thanks, Dana. Questions? Any questions for Dana?
Richard Boll: (Valerie), can you open up the line for questions, please?
Coordinator: If you would like to ask a question over the phone line, please press star 1. Once again, to ask a question over the phone line, please press star 1.
Rick Blasgen: Dana, just a quick question, while we’re searching for folks who may have a question for you. Who are the typical members of this Advisory Board for this effort? Are they out of industry or where do they come?
Dana Goward: So, the President’s Space-Based Positioning Navigation and Timing Board, the name’s a little bit of a misnomer, because there are folks that do non-space-based position navigation timing as well, are mostly - well, so they’ve mostly drawn from academia and folks that have been involved with GPS and other satellite navigation programs in the past.
So, Professor Brad Parkinson from Stanford, he was - when he was in the Air Force he was the architect for putting GPS up initially, is on there. And we also have other folks that are more tangentially related. Our Chairman is actually Admiral Thad Allen, the former Commandant of the Coast Guard. And then there are several representatives. You probably have the same thing, the special government employees and representatives.
So, I’m the representative; we have a representative from Garmin, from Trimble, and maybe uniquely, we have four or five representatives from other nations because GPS is America’s gift to the world. And so we want to hear from other folks as well, about it.
Rick Blasgen: Great. Thank you.
Dana Goward: Yes.
Rick Blasgen: Any questions or comments?
Rick Gabrielson: Dana, this is Rick. I have a quick question for you as well.
Dana Goward: Yes?
Rick Gabrielson: Is this more about a lack of awareness to what the issue is and this is a way of trying to get awareness out there, to get support for it? Or is there disagreement that the recommendations aren’t really either A, needed, or requirements?
Dana Goward: So, that’s a really good question. We think it’s - well this is a longstanding issue since President Bush mandated that the transportation department go out and get a backup to GPS, some sort of backup capability in 2004. So, as a result of that, I was still a faceless bureaucrat at the time, we did - of course you do a study, right? And we did a study. It took about a year and then at about three years it took us to find somebody to actually make this happen.
And in 2008, the Department of Homeland Security announced that they would in fact upgrade an old system called the (RAND) to something called (EVO RAND) and move it from the Coast Guard over to critical infrastructure. So, that was all good. We declared victory but then in 2009 rather than improving the move of the system from one to the other, OMB took the money away during the budget process.
And so there has been a back and forth ever since, as to whether or not this is a good thing to do. Now subsequently, the Obama Administration in 2015, promised Congress that they would establish a backup system for GPS and, in writing, but nothing ever came of it. And we understand it’s because of a combination of folks think that we just should have all of our eggs in the GPS basket, that well, you know, perhaps the open market will provide solutions although it’s very hard to compete with free GPS services and - except on a niche basis, right?
You really can’t provide a utility like water and compete with the water company, unless you’re providing a new service like (unintelligible) or Perrier or something like that. Right? So, the basic utility, and nobody’s been able to get up a business model to compete with it. And, you know, probably unfortunately, the biggest reason, because everybody that we bring this to says yes, this is no problem (unintelligible).
Probably the biggest reason is that (unintelligible) hasn’t died yet. You know, we didn’t reinforce the cockpit doors before 9/11, even though we told ourselves yes, maybe we want to get around to doing that. And when I lived in New Orleans, the Army Corps of Engineers would come around every year and say now when the levies fail, but we didn’t fix the levies before Hurricane Katrina, you know, we waited until afterwards.
So it’s, you know, it’s one of those important but not urgent, but unfortunately it will never be urgent. It will only be disaster recovery if we don’t get ahead of the (unintelligible) on this. And sorry for the sermon, but that’s - that is the question of the year.
Richard Boll: Thanks, Dana. Were there any questions in the queue, (Valerie)?
Coordinator: I show no questions in queue.
Richard Boll: All right.
Rick Blasgen: Oh, I think you’re on mute, Rick.
Rick Gabrielson: Sorry. Dana, is it your recommendation that this body take a look at your write-up, 20 plus pages, synthesize it down and go through and provide support for your recommendations, up to the Secretary?
Dana Goward: We would really consider it an honor if you’d be willing to take a look at what we’ve got and see what you think and whether or not you should make a recommendation.
Rick Gabrielson: Okay. Thank you. Rick, any idea which group that would fall under, our subcommittees?
Rick Blasgen: I was thinking about that too. You know, I was thinking of Innovation, Technology and Strategic Competitiveness, not just because Mel’s not here, but it seems to me that’s where…
Man: Always a good choice.
Rick Blasgen: She says oh, absolutely, I’ll take care of that. I welcome it. Anyway, but I’m sure we can work on that.
Rick Gabrielson: Yes. We’ll take it under advisement, Dana. Thank you.
Dana Goward: All right. Well, again, thank you very much for the opportunity to speak with you. And thank you for your service. I know that the rewards can often be intangible at best for this kind of public volunteer service. So, thank you.
Rick Blasgen: All right. Thank you.
Richard Boll: Thank you, Dana.
Rick Blasgen: Well we are right at 3:42 East Coast Time, and we’ve gotten through our agenda, albeit missing one committee, but we’ll catch up on January 20, which is our next date from what I see here, that our team will meet. I’m sure that will be virtual unless we hear different. But I just want to thank everybody for their time and commitment to our committee, and all of the great conversations we’ve had.
They’ve been really fruitful. A lot of great information here. And who knew ten years ago when we started this committee, we would be involved in some of the things that we’re all involved in now. So, it’s great to see the commitment on the part of industry and all of our committee members to provide guidance on what’s going on in your supply chain world. With that, let me turn it over to Rick Gabrielson for any closing comments Rick, you may have.
Rick Gabrielson: Yes. Thanks. I thought we had some great speakers today. We’ve had some action items coming out of it, going to the Secretary, which is wonderful. I would highlight, you know, Jim’s presentation, from Pfizer, this morning. What a great story. And as you think about - and I don’t know if we can get the slides on that Rich, or not, but I think there is some great work that they’ve done that a lot of supply chains could take at least nuggets of it and really make a significant change for their organization. So, great presentations all the way around.
So I always want to thank everyone, for all their hard work and the commitment to the committee, because it does make a difference. So, thanks, everyone. Rich?
Rick Blasgen: Rich, any closing comments?
Richard Boll: Well I just want to touch base on the next meeting in January. I would also have to agree that it does not look like there’s going to be a face-to-face meeting, it’s probably going to be, another WebEx meeting. I don’t even think we’re going to be able to do a split meeting either. It just doesn’t seem - we’re not even allowed in our building yet. So, I think January might be a little too early for that.
Our next decision will probably be in our next meeting in April. And we’ve always thought of, you know, doing one of our regional meetings. But I think internally, we’ve talked to you about it as well, I think we’d like to be able to have our first face-to-face meeting which hopefully will be in that April, and we’ll have that at Commerce because it would be nice to get some of the members we’ve never even seen before, in a room together, where we can all, you know, get to meet each other a little better instead of, you know, go on one of our regional trips.
So, with that said, those are kind of the updates for the upcoming meetings. And as we said, you can always look at our Web site for the updated recommendations. Actually all of the recommendations are there and also all the upcoming meetings are there as well. And, you know, once we get everything, all the transcribing and audio of the meetings will be on there as well.
So, I just wanted to keep everyone up to date on that. Thank you. And it was a great meeting. Again, it’s great for everyone to show up. I appreciate it.
Rick Blasgen: Terrific. All right. Well with that, we’ll adjourn. I want to thank everybody for once again, their participation; all the great work that’s being done. And we’ll all stay close. And if there are any follow ups you’ll hear from Rich and Gene and Heather and the team. And if not, we can certainly communicate with one another and I’m sure the subcommittees will meet as needed as well.
And as Rick said, our next meeting is scheduled for January 20. So with that, we’ll wish you all a great rest of the week and weekend. And hopefully, we’ll talk soon. Thanks, everybody.
Rick Gabrielson: Thanks, everyone.
Richard Boll: Goodbye everybody.
Heather Sykes: Thank you.