Supply chain delays have dominated headlines for months and caused headaches for American businesses and consumers across a range of products. Earlier this year, the Bipartisan Policy Center convened a panel discussion to gather diverse perspectives on the supply chain crisis, its causes, and when we might expect resolution of the difficulties. Participants in this discussion were:
Panel discussion with:
- Roger Cryan, Chief Economist, American Farm Bureau Federation
- William P. Doyle, Executive Director, Maryland Port Administration
- Jody Milanese, VP President of Government Affairs, National Small Business Association
- Fred Miller, Assistant General Counsel and Government Affairs Liaison, Association of American Railroads
One discouraging takeaway: it could be quite some time before all supply chain challenges are ironed out. Addressing them robustly will help strengthen long-term American competitiveness. Here are four other themes from the discussion and insights from our participants on each.
Shift in Demand
From what we’ve seen with the COVID pandemic is really...that shift in demand in traffic patterns especially growing from the fact that people were not spending as much money on services because everything was shut down and moving that money over to spending on goods.
It was really the tale of two halves. in the first half of 2021, you saw the first six months ... with record-breaking highs ... and then it sort of cooled off toward the end of the year with global supply chain challenges. And what led to those challenges, I think it was a confluence of events starting over in Asia, you saw like shuttered manufacturing and port operations, due to the spikes in the pandemic. Then you had COVID-related labor shortages here at home and really throughout all aspects of the supply chain. We also saw preexisting sort of trade stress on supply chains that was already there but exacerbated by this shift in demand.
We have 65,000 small business owners nationwide in every industry and every sector throughout the country and nearly 80% of them have less than 20 employees and over 50% have only about one to five so definitely the smallest of the small businesses...Our recent polling that we did, over 51% are dealing with delays and closures today whereas a year ago they were experiencing about 38% so that's definitely been a change … Small businesses are facing very similar supply chain challenges to their larger big business counterparts but for them...the challenge is its financially harder for them to overcome.
Farmers are facing pretty much all the issues that anybody in the economy is facing. They have in terms of the sort of the supply chain, in terms of transportation, which is what we’re generally focusing on today, they are facing difficulties, particularly getting exports out.
American agriculture really is the best in the world and we’ve got great farmers, we’ve got great resources, good land, good infrastructure, good ports normally to export from. everything we need except labor, we need help and some solution for that has to be found.
Generally, regulations usually have a disproportional impact on small businesses. When we survey our members, they’re paying on average about $12,000 per year per employee in regulatory costs. So typically costs of any type of new regulation to a small business, especially those with fifty or less employees which is what makes up NSBA membership, they’re paying nearly twenty percent higher regulatory costs and fees.
I think really when the administration is thinking about new regulations or old regulations and reforming them, you’ve got to think about the impacts on the supply chain now, the costs and benefits that go into those rules and what those unintended possible consequences would be on the supply chain.
We use old technology; we are infrastructure challenged right now. We still get the product out, but we’re using augurs and things like that to get it.
We railroads have spent billions of dollars to streamline our systems, our networks, to make sure we’re taking the most efficient route and moving track traffic as quickly as possible so we don't want to disincentivize future investment, or you know really create some inefficiencies where the supply chain would ultimately suffer. So that's something to look at when you’re regulating.
If the ports aren’t being built out for future growth, they won’t be ready, and this is the kind of thing that matters. The infrastructure bill contains funding for highways and inland waterways as well as ports. These are things that are going to matter in the long run. I think the lesson from what’s happened in the last 20-23 months is that we have to keep our investments in infrastructure up for the long-term.
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