One of the subcommittees of the Senate Commerce Committee is the Subcommittee on Surface Transportation and Merchant Marine Infrastructure.  The chairman is Senator Deb Fischer, the senior senator from Nebraska. Yesterday she presided over the subcommittee's second hearing of the year.  The first one, held on January 29, was on "Improving the Performance of our Transportation Networks."  Our impression is that the problems at America's West Coast ports loomed large in that first hearing.  They certainly did at the hearing yesterday, which had the title "Keeping Goods Moving."

In her opening statement, Senator Fischer said that "To grow the economy and create new jobs we need an efficient and reliable intermodal transportation network."  She said "our West Coast ports alone move 12.5 percent of U.S. GDP per year."  She highlighted the potential cost to the U.S. economy of a shutdown of those ports - 405,000 jobs and a $50 billion reduction in GDP - and she noted that potentially greater dangers lie ahead, "as we face the potential for ports on both coasts to be negotiating simultaneously in 2018."

Norman  Bessac of Cargill was the first witness.  Mr. Bessac is the Vice-President for International Sales at Cargill Pork in Wichita, Kansas.  With 143,000 employees in 67 countries, Cargill is America's largest privately held company. 

We'll get to today's quote in a moment.  First, however, we need to share two excerpts from Mr. Bessac's written testimony.  This first is general and obvious but important nonetheless:

The second illuminates the consequences of the port slowdown with easy-to-understand specifics:

Chairman Fischer closely questioned Mr. Bessac on that issue - the loss of sales to foreign competitors.  At one point he had said that, due to the problems at the West Coast ports and other factors, Cargill had recently seen a  "substantial decline in sales."  The dialogue continued:

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Montana's junior and freshman senator, Senator Steve Daines, picked up the reliable supplier theme.  In a back-and-forth with another witness, Katie Farmer, a Group Vice President with BNSF Railway Company, Senator Daines talked first about Montana and then about supply chains.  On Montana he said:

And on the importance of supply chains he added:

 
"I used to be a supply chain guy myself.  I worked for Procter & Gamble for 12 years and was in the supply chain and have an appreciation that the chain is only as good as its weakest link.  If we can't get the harvest to market, then we really cannot realize the great potential of our ag industry. 

"The Port of Vancouver [Washington], the port and the labor dispute we had going on there that now we see going on in Long Beach and LA.  It is having a great impact, [with] ... dwindling confidence [on the part of our trading partners in] the ability for us to deliver.  In thinking about our global opportunity, as our competitors continue to improve in their products, the differentiator for us long term, to win, will be in excellent customer service, the ability to ensure that when we say the product is going to be there, it will be there."

All of the recent TTALK Quotes on this topic have dealt, fundamentally, with the dispute between the Pacific Maritime Association, PMA, and the International Longshore and Warehouse Union, ILWU, and with harm to U.S. importers and exporters that has resulted from that dispute.  The issue of America's ability to move product efficiently and competitively is a much broader one.  It is an essential element of the larger story of American and global trade.  And GBD will continue to focus on it.

The immediate issue, however, is the damage that has already been caused by the dramatic drop in productivity at the West Coast ports. Clearing out the backlog of stalled shipments will take time no matter when work arrangements get back to normal.  That is not likely to happen soon.  If the dispute were settled quickly, however, there would be an added benefit. Ms. Farmer of BNSF explained. Yes, it will take several weeks to clear the backlog, she said, and then added this:

It would be nice if it would all end soon, but as an article in Footwear News put it on Monday, "Any hope for a speedy resolution after the federal mediator's intervention is feeling farther away."

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Your editor is in that stage of life where early memories are crystal clear.  He was a young boy in the mid-1950s, which included the almost perennial World Series rivalry between the New York Yankees and the then Brooklyn Dodgers.  When those contests came around, his much older, married cousin would invariably say, "My heart is with the Dodgers, but my money is on the Yankees."  We would like to think that the PMA and the ILWU will sort things out in the next day or so, and then let everyone use the quieter time of the Lunar New Year to clear the backlog.  We'd like to think that, but we wouldn't bet on it.