A man who spends most of his time in cities with a water view found good reason to make his first official visit to landlocked Utah, hoping to offer some guidance to local business leaders in navigating epic, and ongoing, global shipping and supply chain issues.
But Federal Maritime Commissioner Carl Bentzel also believes Utah can play a crucial role in relieving backups that are driving up the cost of consumer goods, causing deep distress to business owners who rely on import/export flows and could also lead to critical goods, like medical supplies, not getting where they’re needed most.
“I think you have (an inland port) plan that makes sense,” Bentzel told a group of Utah company and business group leaders at a Salt Lake City meeting Wednesday. “We have to get cargo through coastal ports more quickly, and there is simply not enough room at these terminals to store empty containers, handle cargo and handle the current surge.
“Utah is positioned to be in a leadership position in funneling cargo into the interior of the country where it can be handled more appropriately.”
In an exclusive interview with the Deseret News, Bentzel said the current tie-ups with the global shipping industry are the worst since World War II and noted industry changes over the last few decades have concentrated control of the ocean-going freight industry into the hands of other countries.
“In 1990, when I first became involved with global shipping there were 20 ocean carriers and none of them controlled more than 4% or 5% of the market,” Bentzel said. “Now we have eight ocean carriers and none of them are operating U.S. flagged ships.”
He also offered a snapshot illustrating the extent of current slowdowns.
“Ocean carriers used to take 32 days to ship from Beijing to Chicago,” Bentzel said. “Now, it’s 78 to 80 days for the same shipment, and all the equipment goes from turning over 12 times a year to just four times a year.”
And Bentzel noted supplies of that equipment have never been lower and essentially come from one provider.
“Every single marine container is manufactured by one of three companies in China,” Bentzel said. “And they are all classified as state-owned operations.”
Additionally, the chassis that go under the containers for truck transport are also mostly a product of Chinese manufacturers and continue to also be in short supply for overland freight transfer and transport.
COVID-19 wrote the first chapter of the global supply chain crisis when Asian factories were slowed or shuttered in the early days of the pandemic. Then, when manufacturing came back online, production output was increased to catch up with the backlog. In the meantime, consumer demand was achieving historically high levels, particularly in the U.S., driven by home isolation and freshly restored household savings rates bolstered by restrictions on travel, recreational opportunities and even dining out.
Adding to the new avalanche of disposable income was the billions pumped into the economy by U.S. federal agencies in the form of checks to individuals and business subsidies. The fresh cash, and time to ruminate about job dissatisfactions, led to another record — the number of people leaving their jobs and staying out of the workforce, creating sweeping labor shortages.
Bentzel said it has become a perfect storm of issues that will not see any easing in the near term and likely not for another 18 to 24 months. He said getting cargo off ships isn’t the issue, but moving those containers through and out of shipping terminals definitely is.
And, that’s where he believes the Utah Inland Port project can provide a pressure valve, playing the role of inland depot and distribution center for cargo destined for Mountain West deliveries.
Bentzel also believes Utah’s economy could see a sizable boost from port operations beyond the freight transport issues it could help resolve.
“There’s just a huge volume of related commerce for port operations,” Bentzel said. “One of the biggest could be new manufacturing opportunities. There are direct benefits for companies in locating near active port operations, whether they’re coastal or inland.”
While there are numerous inland port operations tied to U.S. shipping terminals on the Eastern Seaboard, Bentzel said Utah’s would be the first to provide similar services in coordination with West Coast ports.
Local businesses had a chance to share their questions, and frustrations, with Bentzel at a meeting hosted by Zions Bank and World Trade Center Utah. One of the hardest things for attendees to hear was that there is simply no near-term relief in sight when it comes to unsnarling current shipping bottlenecks.
But, World Trade Center Utah President and CEO Miles Hansen said there were plenty of proactive options to pursue that would help get Utah businesses through the worst of the crisis, including his organization’s outreach to the Federal Maritime Commission. That entreaty is what brought Bentzel to Utah for a full slate of meetings and consultations.
One of the supply chain relief projects that World Trade Center Utah is working on is the newly launched Crossroads Export-Import Alliance.
The idea is to build a public-private coalition that includes export-import businesses from Utah and around the region, including neighboring and nearby states like Idaho, Nevada, Colorado and Arizona, that would band together to increase their market power when it comes to securing the best contracts, and connectivity, with global shipping entities.
The long-term goals of the alliance could include securing direct vessel service to Salt Lake City for Intermountain customers; expedited rail service to the Intermountain region; formalizing a coalition of Utah and regional companies into a supply chain optimization association; and adding needed infrastructure through public-private partnerships and assets. Those assets could include a transload facility, chassis pool, foreign trade zone, bonded warehouses and additional public warehouses.
Hansen said the idea is to capitalize on one of the hallmarks of the state’s business community.
“We’re going to do it the Utah way and come together to face these challenges,” Hansen said. “There is no magic wand that we can wave, no silver bullet that makes this all go away. But we’ll find solutions and the best path to doing that is bringing all our businesses, our government leaders and assets to bear on addressing and navigating these tough issues.”
In the meantime, an agreement struck by Utah Inland Port with the Port of Long Beach and Union Pacific Railroad last month will begin coming to fruition in the next week or so when the first rail cars begin arriving with shipping containers from the port, according to Jack Hedge, Utah Inland Port Authority executive director.
The idea is to utilize rail service connecting the Port of Long Beach to Salt Lake City to “rapidly evacuate” cargo deposited at the Long Beach terminal that is bound to destinations in the Intermountain West. Once in Salt Lake City, the cargo would be distributed throughout the region.
The three participating entities said that loading 100 intermodal rail cars equates to 300 trucks off the road. They also cite an analysis by the Association of American Railroads that concluded railroads are, on average, four times more fuel-efficient than trucks and moving freight by rail instead of truck lowers greenhouse gas emissions by 75%.
Concerns about environmental impacts, as well as tax-related issues, have fueled pushback on the inland port project from community groups as well as some local government officials.
Utah state lawmakers earmarked $75 million in the 2021 general session for port authority projects, but the creation of the facility spurred controversy and a now yearslong legal battle with Salt Lake City leaders.
While those conversations continue, Bentzel believes Utah’s inland port project will have positive impacts locally and even beyond Utah’s borders.
“It is in the best long-term interest of our country to devise ways to get cargo through,” Bentzel said. “And, I think Utah is on the cutting-edge of how to achieve that goal moving forward.”