3 Ways State Policymakers Can Keep Supply Chains Moving
But states have differed in their responses to the crisis with regard to transportation workers. Some have relaxed rules and allowed transportation workers to operate more efficiently, while others have further regulated transportation labor practices. Here are three things states should be doing to keep supply chains moving:
Ensure all transportation and transportation-supporting workers are deemed essential
By and large, states have exempted transportation workers from laws that order the shutdown of nonessential businesses and economic activities. Growth of business-to-consumer last-mile deliveries has gone through the roof. Even as some states place restrictions on in-person sales of nonessential products, people remain able to receive shipments of household goods large and small, from appliances to electronics, that will make getting through the crisis a little more bearable.
But beyond the front line, employees are also doing important work on the first and middle miles of the supply chain. Factories that turn farm goods into foodstuffs, chemicals into pharmaceuticals and timber into toilet paper continue to churn out products day and night. Warehouses and distribution centers buzz with activity to ensure delivery vehicles are filled. They’re fed by trucks and railroads, each doing their part so homebound Americans can access the products they need.
These workers can’t do it on their own. They’re supported by industries that serve transportation workers, as well as those who maintain transportation equipment and infrastructure. These workers, the locomotive mechanics, infrastructure inspectors and providers of services to long-distance transportation workers are just as essential to the movement of freight as those who drive trucks and handle packages. Yet states differ in what transportation-supporting workers may continue to do their jobs. Some have placed rules on service providers that can make showing up for essential supply chain jobs a challenge.
For instance, at the onset of the crisis, Pennsylvania took action to close indoor dining establishments. In doing so, it forced the state’s highway rest stops to shut down. This left truckers moving goods to and through the state to find alternative places to park, eat and relieve themselves, delaying important deliveries at a time when speed is of the utmost importance. Similarly, there’s substantial variation among state in lists of essential workers exempted from stay at home orders. For example, California’s list reasonably exempts all who support the state’s transportation industry from stay-at-home orders. This list specifically notes that those who staff travel stops are essential transportation workers, as well as those who maintain all types of vehicles, including planes, trains, trucks and their infrastructure. The latter is of particular importance, as infrastructure maintenance staff can be classified as construction rather than transportation employees, adding uncertainty to worker classification. Getting this right matters, both for the safety of the infrastructure itself and the well-being of maintenance staff. For instance, Maryland has limited childcare service to essential personnel, making it especially important that those who maintain key infrastructure are able to access services that allow them to show up reliably.
Lift state-level transportation labor rules
The onset of the crisis brought a relaxation of certain transportation regulations that limit the social costs transportation activity generates. At the federal level, the Federal Highway Administration suspended rules that ban commercial activity at rest stops, allowing food trucks to serve transportation workers in place of shuttered indoor dining areas. Many states raised truck weight limits on their highways, accepting (exponentially) more road damage to allow trucking companies to better adapt to illness-induced staffing shortages. Some states, including Iowa, have also allowed oversized and overweight trucks hauling essential goods to operate on their roads, a choice that will allow more goods per shipment to rural areas.
States could extend this logic to other segments of the freight market. Railroads are able to move vast quantities of freight with few staff—traits that make them resilient to epidemic episodes. In recent years many states have mandated minimum staffing levels for freight railroads. While their authority to do so remains up for debate, the crisis has made clear that there are real social benefits to operating essential goods logistics in ways that are resilient to epidemic-induced staffing shortages. This can’t happen when states require two people to physically be aboard every locomotive within their borders. For smaller railroads, suspending current rules could allow some to continue to operate in reduced capacities, moving raw materials from rural areas to be processed into essential goods. But a better step would be for states to repeal the rules entirely, allowing railroads to work with their workers to test technologies now that will keep staff out of harm’s way in the future.
Remove rules that segment freight markets
States impose myriad rules that create barriers within freight markets. They do things like ban direct-to-consumer sales of vehicles, mandate the three-tier alcohol distribution system and create different categories of waste hauling. Specialization is at the core of why the economy works. But the transportation space has long been a policy area where protectionist rules are used to create market niches for favored groups. In good times, this segmentation is wasteful. But at a time where we need to make the most of every essential transportation worker, an over-segmented transportation market that requires more labor than necessary to operate adds avoidable risk to the country at large.
States were already moving to liberalize some rules that segment freight markets. The rise of Tesla gave policymakers a reason to ease dealership restrictions in recent years, a shift that creates value now at a time when essential workers have the ability to access cars without the potential health risks of a trip to a dealership. In the alcohol space, some states have granted breweries, distilleries and vineyards more ability to sell directly to consumers. Similarly, Texas has allowed combining of grocery and alcohol delivery. In both cases, regulators are allowing the elimination of previously mandatory duplicative freight movements. Most of these rules should be permanent, and regulators nationwide would be wise to imitate such successful actions. But not all should. For instance, some places have shut down segments of the waste hauling market, moving primarily to a single waste stream in the name of putting fewer essential workers at risk. It’s a sensible move, but one that is only appropriate on a temporary basis.
Shutting all supply chains down to weather a pandemic crisis is not a viable long-term policy solution. People still need to eat, workers and homes still need fuel, and it’s not easy to separate essential freight from nonessential freight. The best policymakers can do is ensure these workers don’t face paper barriers to performing their work. Together, the changes above would ease the flow of goods across states, ensuring consumers and essential businesses have what they need to weather the ongoing crisis.
Image credit: Luca Santilli
