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DOT Targeting Supply Chain Disruption

By Brody Garland, K&L Gates

Dozens of ships anchored outside of America’s busiest ports, steadily spiking freight rates, and frustrated consumers inheriting both the paralyzing delays and the exorbitant price increases: these have been the painful realities within the global supply chain in recent years. In a whole-of-government effort to mitigate the root and proximate causes of the supply chain crisis, the Biden Administration has responded with a roadmap for achieving a more efficient and more resilient supply chain.

In February, the U.S. Department of Transportation (DOT) released a report titled “Supply Chain Assessment of the Transportation Industrial Base: Freight and Logistics,” which provides multiple recommendations to address the ongoing supply chain crisis. Responding to Executive Order 14017: America’s Supply Chains, the report identifies and addresses ongoing challenges, while offering potential policy responses to strengthen the nation’s supply chain.

The central theme of the DOT’s thorough report is the necessity to build resilient supply chains to address current and future disruptions. As a result of several factors, including the growth of “just in time” supply chains, the overwhelming demand for import cargoes during the COVID-19 pandemic, industry consolidation, and a general lack of investment in infrastructure, the DOT is concerned the current supply chain lacks resilience. The report highlights that concern in stark terms, noting the pandemic has compounded existing supply chain issues, which has resulted in temporary port closures, shortages across the supply chain, elevated levels of congestion, and increased prices for consumers. The release also highlights several barriers to supply chain resilience the recommendations hope to mitigate, including equipment and warehouse capacity, workforce conditions, and data availability, among others.

The report recognizes the federal government cannot unilaterally solve supply chain disruptions, as many of the component parts of the freight supply chain are owned and operated by the private sector, but notes federal, state, and local agencies can still play an important part by funding infrastructure investments, appropriately regulating the industry, improving supply chain data flows, and supporting cross-sector or multijurisdictional efforts to address supply chain resilience.