The Supply-Chain Bureaucracy
Back before the covid-19 pandemic — it seems decades ago, not a mere four years — nobody in Washington gave much thought to supply chains. Queues of container ships outside ports, rate increases of 500 percent or more for ocean shipping, long delays in shipments of imports and exports, and factory closures due to lack of critical components changed all that. President Biden appointed a supply-chain “czar” to straighten it all out, and claimed victory when port congestion cleared and freight rates returned to normal (although the end of the pandemic had far more to do with that than federal action). Transportation Secretary Pete Buttigieg even asserted this week that “part of what’s led to disinflation is the attention we paid to shipping costs,” although there’s not much evidence that Biden’s criticism of “foreign-owned shipping companies” is responsible for bringing inflation down.
Now, the Biden Administration has named a White House Council on Supply Chain Resilience, whose 27 or more members — the membership list includes unspecified “other senior officials” in addition to a bunch of cabinet secretaries — are supposed to advance a “long-term government-wide strategy to build enduring supply chain resilience.” What does this mean? According to the press release, the plan includes funding to “strengthen our domestic food supply chains and create more opportunity for farmers and entrepreneurs in 37 states and Puerto Rico”; “to develop a nationwide plan for smart manufacturing”; “investment in clean energy supply chains” in communities affected by closures of coal power plants; and so on.
It’s all interesting stuff. But you wouldn’t know from the Administration’s announcement that most supply chains are organized by private companies to meet their business needs. Many of those companies are currently trying to figure out how to make their supply chains more resilient in the face of disruption without raising costs so much that they sacrifice market share. This is a problem they must resolve in cooperation with their suppliers, freight forwarders, transportation carriers, and customers. They don’t particularly need the help of an expanding federal supply-chain bureaucracy.
It’s not that the federal government has no useful role here. The Administration has done a lot to provide better data about the flow of freight into and within the United States. The Bureau of Transportation Statistics’ supply chain and freight indicators, first published during the pandemic, are particularly valuable. And defense supply chains are a legitimate federal concern. But the United States would be better served by pursuing international arrangements to smooth trade through supply chains, such as the 14-country Indo-Pacific Economic Framework it negotiated in 2022 but has since turned its back on, than by an all-of-government effort to manage the flow of goods in a $25 trillion economy.
Tags: supply chains