FULL EPISODE: 10/17/21 Federal Maritime Commission Chair Daniel Maffei & Rep. Jim Costa on the supply chain crisis

Published: Oct. 16, 2021 at 7:08 PM EDT
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Washington, D.C. – Greta Van Susteren interviewed Federal Maritime Commission Chairman Dan Maffei and Rep. Jim Costa (D-Calif.), Chairman of the Livestock and Foreign Agriculture Subcommittee, about congestion at U.S. ports, supply chain bottlenecks, and the infrastructure bill for Gray Television’s “Full Court Press with Greta Van Susteren” airing Sunday, October 17, 2021.

When asked to explain the log jam at U.S. ports, Chairman Maffei said that part of the problem is we “now have about $600 billion more of consumer spending annually than we did before [COVID], and that’s an awful lot of strain on our ports.”

On whether orders would arrive in time for Christmas, Maffei said: “There’ll be plenty of presents, but they may not be exactly what you want. So, try to be smart. If it’s a specific thing your child wants, order it early. Have them write Santa Claus early.”

Maffei predicted we may not see relief at ports until well into 2023, explaining that even when current demand is satisfied, some companies may overcompensate by ordering products they don’t need.

Rep. Jim Costa told Van Susteren he hopes the House will pass infrastructure legislation in October “because there is much-needed funding in there that could help alleviate this problem in our ports and harbors.”

“I think the voters next year will hold us accountable,” said Costa. “That’s one of the reasons that I, along with a number of my colleagues believe that we have to pass the bipartisan package sooner than later, and then, separately work on the reconciliation measure.” Costa added that he and many of his colleagues did not believe holding the bipartisan infrastructure package in the House would influence negotiations by Senators Manchin and Sinema.

Chairman Maffei and Rep. Costa interview highlights are below.

Dan Maffei Highlights

On what is happening at U.S. ports and why

Dan Maffei, Federal Maritime Commission Chairman

I would describe it as just the ports really on overload. They’ve moved more cargo this year than in any other previous leap year by a long shot. So, it’s not exactly that the ports aren’t working. It’s just the demand is so high that they’re just getting big, getting clogged, they’re getting overwhelmed. As a result, we’ve got lines of container ships, sometimes as many as 60 or 70, at our biggest port complex at LA Long Beach. Most of the other ports in the country don’t have those kinds of lines, but they also have a lot of congestion problems.

Dan Maffei, Federal Maritime Commission Chairman

This really began the summer of 2020. I think everybody was predicting that there’d be a big slowdown in the economy because of COVID, there’d be fewer people to work the ports and just sell things. What people did not predict was that all of us staying home, myself included, basically worked as hard as we could at home, but we also had some time on our hands and we went shopping.

Dan Maffei, Federal Maritime Commission Chairman

As a result, it’s not that overall spending went up. The spending way shifted to the consumer sites, such that we now have about $600 billion more of consumer spending annually than we did before, and that’s an awful lot of strain on our ports.

On what can be done to alleviate the problem at ports

Dan Maffei, Federal Maritime Commission Chairman

There are definitely things we can do in the long run, but in the short run, the only thing we really can do is do a better job of coordinating. Some people say, well, we should lower the prices of shipping because they’re so high. If we did that, we might even have a bigger demand and, certainly, we don’t want to raise those prices. They’re already sky-high.

Dan Maffei, Federal Maritime Commission Chairman

So, the only way we can do it is to really increase efficiency. That’s why I was pleased to see President Biden really convene a number of the really biggest shippers in the country and the biggest ports and say, look, we got to work at night because there aren’t any more roads that are going to get built, but we do have this resource of extra hours and we can use those to try to do a job of lessening that congestion just a bit.

On where the bottleneck is

Greta Van Susteren

Well, where is the clog point? If the items are coming out of other nations that we’re buying and they’re on container ships to the different ports, LA Port, for one example, and they’re waiting to unload, it seems to me that the real clog point is actually unloading and then, once unloading, is moving the cargo or whatever it is into the country. That seems to me to be the log jam.

Dan Maffei, Federal Maritime Commission Chairman

The problem is, it feeds on itself. Because you have such a huge demand increase, it’s difficult to have all those workers load the shelves. We did see, obviously, a dip in worker productivity during the COVID issue and we still have some of that, but then it works its way up. So, that little delay then becomes a bigger delay when you have the delay of not as many truck drivers as you need and not as many warehouse workers as you need.

Dan Maffei, Federal Maritime Commission Chairman

Then that becomes a delay when you get to the ports and, if the ports can’t empty, if there’s no place for the cargo to go, then it becomes much, much harder to unload those ships.

Dan Maffei, Federal Maritime Commission Chairman

So, unfortunately, it’s all connected to itself and when you have this big a demand increase, nothing anyone could have predicted in my view, that is when you’re going to have the kind of congestion that leads to further delays and then feeds on itself.

On whether we will get shipments in time for Christmas

Dan Maffei, Federal Maritime Commission Chairman

Still, even in the midst of this pandemic, you can order stuff and it will come from around the world. It may be delayed, but it will come. We need to keep it that way. A lot of people are worried about getting their Christmas gifts on time. I have a seven-old-daughter. I’m worried about it, too. There’ll be plenty of presents, but they may not be exactly what you want. So, try to be smart. If it’s a specific thing your child wants, order it early. Have them write Santa Claus early.

Dan Maffei, Federal Maritime Commission Chairman

That’s sort of what you can do because the system is still working, but it is gummed up and slowed down, unfortunately. So, we also have to be ready as consumers to try to make sure that we understand that and that we’re doing what we need to do to get what is really important to us.

On whether the supply chain crisis is contributing to inflation

Dan Maffei, Federal Maritime Commission Chairman

Yeah, it does. The Chairman of the Federal Reserve has noted the fact that inflation hasn’t declined so much is due to some of the supply chain crises. That said, though, if you look at some of the sectors like energy, food, cars, which most cars don’t come in by container, a lot of it doesn’t have to do with a shipping crisis. It has to do with the economy generally.

Dan Maffei, Federal Maritime Commission Chairman

Inflation is never a good thing. You never want to see it but, to some extent, when you have the demand as high as it is, it is just what happens in markets. So, what we’re trying to do is, again, do everything we can to keep the supply chain moving and to make that ocean freight piece as small a portion as we can of some sort of inflationary pressure, but it is one of the issues when you have this much demand for goods coming over.

On China, national security, and our ports

Greta Van Susteren

From a national security perspective, are any of our ports or our terminals at these ports, are they owned by any foreign countries and, in particular, does China own any?

Dan Maffei, Federal Maritime Commission Chairman

The terminals are partly foreign-owned, but they have to be partly domestic-owned. The place where you really have foreign ownership, though, is in the container lines themselves, the people who own and operate these big, huge container ships. For a variety of reasons, there are no longer any of those that are based in the US.

Dan Maffei, Federal Maritime Commission Chairman

They, of course, have US operations, thousands of employees here, but they’re not based here. That is a concern. It’s certainly of concern to me, given that I’m operating on legislation that was put together when there were twice as many container lines and a number of them were based in the US and now, it’s a very, very different situation. So, it doesn’t mean they’re necessarily bad, but it does mean that they are, in fact, foreign entities and we do have to treat them as such.

Greta Van Susteren

The fact that, number one, we have the log jam, two is that we have foreign countries, specifically China having an enormous amount of influence on our supply chain, both in the products and in terms of building the cranes and everything else. Isn’t it a national security issue that’s sort of being discounted?

Dan Maffei, Federal Maritime Commission Chairman

I’m not sure if it’s national security exactly because the president has brought authority to use the Merchant Marine if necessary, but I do think it’s sort of a national economic interest. We have allowed ourselves to become a country...

Greta Van Susteren

Isn’t that national security because we don’t have stuff?

Dan Maffei, Federal Maritime Commission Chairman

I’ll agree with you there, but I guess I don’t want people to think that we’re not going to have the PPE we need or that there’s a military threat, but I agree with you. It is in our national security interest to have an economy, I think, which doesn’t quite so much depend on imports. It doesn’t quite so much depend on these things.

Greta Van Susteren

But prices are sky-high now because of the demand ...

Dan Maffei, Federal Maritime Commission Chairman

In the long run, we do need to look at why we are such a consumer nation such that when we had a pandemic, one of the biggest impacts of it was we all just started buying consumer goods. What does that mean to us as a country into our economy in the future?

Dan Maffei, Federal Maritime Commission Chairman

In the short run, it’s very important that we keep the economic recovery going. So, important questions to ask but, right now, I’m just going to do everything I can, even though it’s not going to solve everything, but everything I can to keep that supply chain moving as efficiently as it can, given the demands on it.

On whether the government can do anything

Dan Maffei, Federal Maritime Commission Chairman

I do think there are some things Congress can do. They’re looking at legislation now that maybe gives us at the Federal Maritime Commission a little more leverage on these foreign operating carriers.

Greta Van Susteren

To do what? What would you do?

Dan Maffei, Federal Maritime Commission Chairman

One of the things I would do is come down hard on some of these external fees. We need transparency, and that means that the rate needs to be the rate. The market only works if you know what you’re paying for and what you’re getting. With a system of confusing contracts and all of that other stuff, that’s already pretty complicated, but then there’s these fees they put on top of them.

Dan Maffei, Federal Maritime Commission Chairman

They sometimes call them congestion fees, sometimes a value-added fee. We investigate these things at the Federal Maritime Commission and, by and large, we find out that these are pretty much just add-ons to the rate.

Dan Maffei, Federal Maritime Commission Chairman

I do think we need more stress on exports. Too often, it’s in the container ships’ best interest to drop off a full container of imports to the US and then leave with a container because it costs so much more.

Dan Maffei, Federal Maritime Commission Chairman

So, there’s certainly things we can do, and I think what the president is doing is the right approach. He is bringing together companies. He’s not demanding, but he is saying, for your country, for the economy, let’s work this out, and he’s getting some really good...

Greta Van Susteren

The fact still remains is, we’ve got this huge demand right now, we’ve got all these containers, ships waiting to come in, and I don’t know how the talk can address the problem.

Dan Maffei, Federal Maritime Commission Chairman

I would say this. Just because you can’t solve it completely doesn’t mean you shouldn’t try. I hope we haven’t gotten to an era where we’re so cynical that we say to, whether it’s a president or an agency, a director like me, or anybody, that you shouldn’t even try to help because you can’t solve the whole thing. No, it’s true. This is a complicated, as I say, a Rubik’s cube kind of situation. You can’t solve the whole thing, but there are ways that you can help.

On when the log jam might end

Dan Maffei, Federal Maritime Commission Chairman

The truth is, I expect it to be pretty high well into 2022, perhaps into 2023 because, even after you get some of this demand is satisfied, you’re going to have the inevitable overcompensation of companies that used to order right when they need it, just in time manufacturing, that sort of thing. Now, they’re going to say, oh, shoot, we don’t want to get caught on the other end of this. We better have a big storage and warehouse and that sort of thing. So, because of that, I expect we’re not going to see true relief until 2023.

Rep. Jim Costa Highlights

On the infrastructure bill

Greta Van Susteren

Are you worried that the bipartisan bill that’s passed in the Senate is not going to get passed in the House and .. it won’t get signed by the President?

Rep. Jim Costa (D-Calif.)

Well, I’m concerned about it. That’s why I’ve been among those members that have said, “Let’s act on the bipartisan infrastructure measure.” We tried to have that happen in September. Unfortunately, it did not. We have another deadline pending in October, the end of this month. And I hope at that point in time, we’ll pass that and send it to the President, because there is much-needed funding in there that could help alleviate this problem in our ports and harbors, and it’s much needed. That’s why we need to invest in America’s infrastructure. Reconciliation is important, and I support that effort, and what we ultimately end up in terms of the priorities of the reconciliation package, we’re negotiating right now. However, the bipartisan infrastructure measure is ready to go, and we ought to get it to the President’s desk as soon as possible.

Greta Van Susteren

The Democrats could clearly do that; pass it in the House, you have the majority. In the event that the bipartisan package doesn’t pass, so we don’t get the funding for instance, for the infrastructure for these ports, would you expect, or what do you think it’s fair for voters in the midterms to hold the Democrats accountable, since you have the present ability to do this?

Rep. Jim Costa (D-Calif.)

Well, I think the voters next year will hold us accountable and that’s one of the reasons that I, along with a number of my colleagues believe that we have to pass the bipartisan package sooner than later, and then, separately work on the reconciliation measure, as we’re doing today. But the fact is, is that I don’t believe, and I think a lot of my colleagues, that holding the bipartisan infrastructure package is going to influence the negotiations by Senator Manchin, and Senator Sinema, and others who are about the process of trying to negotiate the differences among the Democratic members of the House and the Senate.

On whether gridlock at the ports of Los Angeles and Long Beach is causing retail and food crises

Rep. Jim Costa (D-Calif.)

It’s both. The retail crisis, we’re going to be seeing the impacts of here in the fall with Christmas coming upon us, but California agriculture, and I’m a third-generation farmer, we export 44% of our agricultural products in a given year.

Rep. Jim Costa (D-Calif.)

Citrus products, and other kinds of more perishable foods that we export can’t sit around the harbor waiting for a container ship to load on. And we’ve had problems in the past where a lot of our perishable products have unfortunately gone to waste, waiting for an ability to be exported. So this is both a food issue, as well as a retail issue.

On trade and container ships leaving the country empty

Greta Van Susteren

Is there anything legislation can do about making sure that when a container ship comes into this country, offloads its product, that our exports get put on the containers and go back out, rather than having them leave empty, because that hurts the producers here in this country?

Rep. Jim Costa (D-Calif.)

Yes. And that’s why the legislation that Congressman Garamendi, myself, and over 1000 co-sponsors are pursuing, that we hope to get out before the end of this year, either in the Coast Guard reauthorization bill or another measure, but the bottom line is that the Federal Maritime Commission doesn’t have the flexibility necessary to deal with that issue of container ships leaving empty, because there’s an issue of the demurrage rule, on which container ships can then charge us for them waiting for periods of time.

Rep. Jim Costa (D-Calif.)

The fact of the matter is we have to have a level playing field as it relates to trade. And one of the ways that we guarantee that is that those ships that offload, go back with products that are produced in the United States, to those Asian markets, in the case of Los Angeles and Long Beach Harbor, as well as Oakland and Seattle. So the legislation that we’re looking at really provides some relief, gives the Federal Maritime Commission more flexibility to deal with these issues.

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About Greta Van Susteren:

Greta Van Susteren is the Chief Political Analyst for Gray Media and host of Full Court Press. Ms. Van Susteren is a veteran of Fox News Channel, MSNBC, and CNN. Her prime-time Fox News Channel Show, “On the Record,” was number 1 in its time slot for 14 1⁄2 years. Before joining Fox News, she hosted CNN’s prime-time news and analysis program, “The Point with Greta Van Susteren,” and co-hosted the network’s daily legal analysis show, “Burden of Proof.” Her legal analysis for CNN’s coverage of Election 2000 earned her the American Bar Association’s Presidential Award for Excellence in Journalism. She continues to host the weekly 30-minute program “Plugged In with Greta Van Susteren” on Voice of America, which broadcasts exclusively outside of the United States.

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