With New Jersey and the entire nation struggling with supply chain delays and hiring shortages, some prominent figures in those industries here say the time is ripe to overhaul the approach to such issues. “A lot of people are talking about ‘let’s go back to normal.’ I don’t want to. Normal failed,” John Kennedy, who heads the New Jersey Manufacturing Extension Program, said during a Dec. 1 conference on the supply chain shortages, hosted by the Commerce and Industry Association of New Jersey.
Many segments of the global manufacturing and shipping supply chain have, according to McCarter & English Partner Ron Leibman, gotten into the habit of maintaining “lean logistics.”
“We as a country decided that the best way to ship goods is the cheapest, the best way to manufacture is the cheapest. There was no resilience, there was no redundancy,” he added. Leibman heads the Newark law firm’s Transportation, Logistics & Supply Chain Management practice.
“All we needed is something to set it off,” Leibman said, and that happened to be the COVID-19 pandemic, which caused widespread factory closures, outbreaks in the shipping and trucking sectors, and disruptions in retail.
But any number of geopolitical disputes – tariffs or trade wars – could have triggered the same avalanche. But the results are the same: cargo is taking weeks longer to reach destinations, adding thousands of dollars in costs, said Jimmy Shee, president of Granwell Products, a West Caldwell wholesaler of paper and synthetic film goods.
President Joe Biden has implemented some measures to alleviate the delays, such as expanded trucking hours and a federal investigation into allegedly excessive shipping fees and other activities in the gas and oil markets.
Some large retailers say those actions are working.
“We are seeing progress. The port and transit delays are improving,” Walmart Chief Executive Officer Doug McMillion told Biden during a virtual White House summit in late November.
“Because of what you all did to help with overnight hours and because of the team’s work to reroute to other ports, to extend our lead times, and to have other creative solutions, we’ve seen an increase in throughput over the last four weeks of about 26% nationally in terms of getting containers through ports.”
Made in America
Some proposals have been around for a while. For example, many industry executives and experts have been calling for greater domestic capacity, citing patriotic and national security reasons. To that end, U.S. Sen. Bob Menendez and a bipartisan, bicameral group of lawmakers are pushing a bill in Congress that would create a national supply chain database.
Proponents argue that during the early stages of the pandemic, officials understood what personal protective equipment or PPE components were produced locally, but had no awareness of what was available in neighboring states and across the country.
“We have a database with over 9,000” manufacturers and businesses, but “our databases didn’t talk to each other,” Kennedy said at the CIANJ event. “Here we are trying to put the pieces together here to try to figure out who makes parts for certain types of PPE and ventilators, and it was taking us weeks.”
New Jersey has been trying to build out its own PPE manufacturing capability – masks, gloves and face shields for example – but progress has been slow.
Under the proposal being spearheaded by Menendez, the Hollings Manufacturing Extension Partnership – a public-private partnership based in the National Institute of Standards and Technology – would create a National MEP Supply Chain Database. There would be funding for $31 million in upfront costs and $104 million to keep the database in operation.
The database would aggregate information from manufacturing records kept in each of the 50 states and Puerto Rico. It would include basic company information, as well as an overview about capabilities, accreditations and products. The database would enable manufacturers anywhere in the nation to find domestic alternatives for raw materials and other goods, rather than rely on imports.
“What happens is that we go from panic to panic,” Kennedy added. “Ida wasn’t the first storm – it’s been 16 years from Katrina, 10 years from Sandy – yet we go back to the same normalcy and that doesn’t work.”
Lack of trucking staff and warehouses, along with containers snarled in the supply chain for days or weeks, have disrupted supply chains across the nation, including regions served by the Port Authority of New York and New Jersey, which encompasses most of the Northeast and Midwest.
“We don’t promote the business of driving trucks in the industry,” said New York Shipping Association President John Nardi. His organization represents employers that hire Longshoremen to work in the marine terminals. “When you’re talking to your friends, if you say, ‘my son or daughter, they’re going to be a truck driver’ — you don’t get invited to the local cocktail party anymore.”
So the inland network has been unable to keep up with the flow of goods, essentially the same problems bedeviling ports along the coasts.
Warehouses are struggling to keep up with demand, both in terms of the available storage space and the workers to keep them running. The issues have been particularly acute with the explosion of online shopping and e-commerce.
Building more warehouses itself poses problems. They snarl traffic in the local communities, require a great deal of space and create impervious surfaces like parking lots, which increase local flooding.
The state Legislature is considering a bill that would control this “warehouse sprawl,” by allowing local municipalities and the state government to have greater input in how these developments move forward.
“New Jersey is proud to be known as the Garden State, but we are at risk of becoming the warehouse state,” the bill’s main sponsor, outgoing Senate President Stephen Sweeney, D-3rd District, said in a statement.
Sweeney, who lost his reelection bid last month, said the measure would give host communities and neighboring towns the ability “to have a voice in the process and the ability to reject proposals that will cause them harm.”
New Jersey Future Research Director Tim Evans said that the bill would essentially create a “regional approach” that ensures the protection of lands “better used for farming, recreation, or some other non-industrial use.”
Editor’s note: At 3:17 p.m. EST on Dec. 7, 2021, this article was changed to update the description of the NYSA. [/vc_column_text][/vc_column][/vc_row]