Report: President Joe Biden’s Executive Order Won’t Help Supply Chain Crisis

A truck departs after picking up a container Wednesday, Oct. 13, 2004, at the Port of Long Beach, Calif. The nation's largest port complex, already beset by delays, will experience in coming years a rising tide of Pacific Rim cargo. But what should be good economic news has instead exposed …
AP Photo/Ric Francis

President Joe Biden signed an executive order earlier this month designed to increase competition in the U.S. economy as a way to help resolve the supply chain crisis that is taking place in the post coronavirus pandemic era. But critics say that the free market, not regulations, will help resolve the kink in the supply chain.

The maritime and offshore news website gCaptain reported on reactions to the EO:

The World Shipping Council (WSC) is coming to the defense of ocean liners after President Biden issued an executive order addressing anti-competitive behavior in shipping and other industries, suggesting it is the unprecedented demand for imports that has thrown supply chains into disarray rather than any fault of the liners.

The United States has faced unprecedented cargo congestion since the second half of last year when the U.S. and global economy began emerging from COVID-19 shut-downs.

According to the WSC, carriers are already deploying all available capacity to help meet demand for imports by U.S. consumers and U.S. businesses. Rather, it’s a lack of rail and truck capacity, warehouse space, and ports that are bursting at the seams with cargo that are creating the biggest disruptions in the supply chain.

“This is not the fault of any given supply chain actor,” John Butler, president and CEO of the council. “Supply chains simply cannot efficiently handle this extreme demand surge, thus resulting in the delays, disruptions and capacity shortages felt across the chain.”

“All supply chain players are working to clear the system, but the fact is that as long as the massive import demand from U.S. businesses and consumers continues, the challenges will remain,” Butler said. gCaptain reported:

The WSC also points out that it’s not a lack of competition in the industry that is causing unprecedented surge in freight rates, as was suggested by a White House fact sheet on the executive order, rather it’s supply-demand imbalances as well as supply chain bottlenecks caused by Covid-19.

Biden blamed “exorbitant detention and demurrage charges,” which carriers say are charged to encourage timely pickup and return of equipment. Butler said:

We agree with the White House that the Federal Maritime Commission (FMC) has the tools to investigate and is the appropriate authority to take action on any issues when it comes to detention and demurrage. Shippers can report any irregularities so that they are properly investigated, and action taken against any improper practices.

Normalizing demand, not more regulations, is the remedy, the council maintained. Butler said:

The current supply chain disruptions are the result of an historic surge in demand by Americans for goods from overseas. There is no market concentration ‘problem’ to ‘fix’, and punitive measures levied against carriers based on incorrect economic assumptions will not fix the congestion problems.

“Only normalized demand and an end to Covid-related operational challenges will solve the bottlenecks in the supply chain,” Butler said.

The supply chain website Loadstar had a more glowing account of the Biden EO.

Federal Maritime Commission chairman Daniel Maffei said that “the FMC has increased its scrutiny of ocean shipping lines to identify issues of anticompetitive behavior and will cooperate with other government agencies, including the Department of Justice, to root out such behavior,” the website reported.

“The FMC chairman added that Mr Biden’s executive order ‘reinforces these efforts and indicates his prioritization of a fair and reliable supply-chain,’” the website reported.

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